1
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 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.
_____
Yes No
Number of common shares outstanding as of April 26, 1996:
3,786,855 par value $.01 per share
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Optek Technology, Inc. Consolidated Balance Sheets as of
April 26, 1996 and October 27, 1995.
Optek Technology, Inc. Consolidated Statements of
Operations for the Three Months and Six Months Ended
April 26, 1996 and April 28, 1995.
Optek Technology, Inc. Consolidated Statements of Cash
Flows for the Six Months Ended April 26, 1996 and April
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.
FORM 10-Q
PART I
OPTEK TECHNOLOGY, INC.
Consolidated Balance Sheets
(in thousands except share and per share data)
(unaudited)
Assets April 26, 1996
October 27, 1995
Current Assets:
Cash $ 727 $ 928
Accounts receivable, net of allowance for doubtful
accounts and customer returns of $1,313 in 1996
and $975 in 1995 7,226 6,931
Inventories (note 2) 5,184 5,284
Prepaid expenses 117 60
Total current assets 13,254 13,203
Property, plant and equipment, at cost 34,047 33,282
Less accumulated depreciation 21,932 20,618
12,115 12,664
Assets held for disposal at the lower of cost or
estimated net realizable value 83 141
Other assets 44 57
$25,496 $26,065
(continued)
FORM 10-Q
PART I
OPTEK TECHNOLOGY, INC.
Consolidated Balance Sheets
(in thousands except share and per share data)
(unaudited)
Liabilities and Stockholders' EquityApril 26, 1996October 27, 19
95
Current Liabilities:
Checks not presented for payment $ 961 $ 979
Accounts payable 1,930 2,339
Accrued expenses 5,481 5,857
Total current liabilities 8,372 9,175
Long-term debt 10,279 15,996
Other liabilities 88 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
3,786,855 shares in 1996 and
3,444,624 shares in 1995 38 34
Additional paid-in capital 13,295 13,016
Accumulated deficit ( 6,576) (12,240)
Total stockholders' equity 6,757 810
$25,496 $26,065
(See accompanying notes to consolidated financial statements)
FORM 10-Q
PART I
OPTEK TECHNOLOGY, INC.
Consolidated Statements of Operations
(in thousands except share and per share data)
(Unaudited)
THREE MONTHS ENDED
April 26, 1996April 28, 1995
Net sales $18,051
$15,584
Cost and expenses:
Cost of sales 10,344 9,595
Provision for excess and obsolete inventories 25 137
Product development expenses 347 116
Engineering expenses 960 835
Selling expenses 1,340 1,046
General and administrative expenses 831 753
Total cost and expenses 13,847 12,482
Operating income 4,204 3,102
Other (income) expense:
Interest expense 408 801
Other, net (97) 289
Total other expenses 311 1,090
Earnings before income taxes 3,893 2,012
Income tax expense 274 10
Net earnings $ 3,619 $ 2,002
Earnings per common share $ 0.47 $ 0.29
Weighted average number of common shares and
common equivalent shares outstanding 7,568,847 6,975,906
(See accompanying notes to consolidated financial statements)
FORM 10-Q
PART I
OPTEK TECHNOLOGY, INC.
Consolidated Statements of Operations
(in thousands except share and per share data)
(Unaudited)
SIX MONTHS ENDED
April 26, 1996April 28, 1995
Net sales $33,091
$28,834
Cost and expenses:
Cost of sales 19,512 18,424
Provision for excess and obsolete inventories132 288
Product development expenses 542 249
Engineering expenses 1,908 1,550
Selling expenses 2,637 2,031
General and administrative expenses 1,657 1,409
Total cost and expenses 23,388 23,951
Operating income 6,703 4,883
Other (income) expense:
Interest expense 857 1,690
Other, net (147) 288
Total other expenses 710 1,978
Earnings before income taxes 5,993 2,905
Income tax expense 329 22
Net earnings $ 5,664 $ 2,883
Earnings per common share $ 0.75 $ 0.42
Weighted average number of common shares and
common equivalent shares outstanding 7,494,765 6,971,766
(See accompanying notes to consolidated financial statements)
FORM 10-Q
PART I
OPTEK TECHNOLOGY, INC.
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
SIX MONTHS ENDED
April 26, 1996April 28, 1995
Cash flows from operating activities:
Net earnings $ 5,664 $ 2,883
Adjustment to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 1,380 1,316
Gain on sale of property, plant and equipment - (2)
Changes in assets and liabilities:
Accounts receivable (295) 201
Inventories, prepaid expenses and other assets 57
870
Accounts payable, accrued expenses and
other liabilities (782) (225)
Net cash provided by operating activities 6,024 5,043
Cash flows from investing activities:
Purchase of property, plant and equipment (773) (583)
Proceeds from sale of property, plant and equipment -
2
Net cash used in investing activities (773) (581)
Cash flows from financing activities:
Net repayment under long-term bank debt (5,717) (4,604)
Net proceeds from exercise of stock options 283 12
Other financing activities (18) 75
Net cash used in financing activities (5,452) (4,517)
Net increase (decrease) in cash (201) (55)
Cash at beginning of period 928 722
Cash at end of period $ 727 $ 667
Interest payments $ 909 $1,691
Income tax payments $ 255 $ 2
(See accompanying notes to consolidated financial statements)
FORM 10-Q
PART I
OPTEK TECHNOLOGY, INC.
Notes To Consolidated Financial Statements
April 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 six
months ended April 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:
April 26, 1996October 27, 19
95
Finished Goods $1,149 $1,186
Work-in-process 3,388 3,393
Raw materials 3,201 3,158
Reserves for surplus and obsolete inventory (2,554)(2,453)
$5,184 $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 through the second
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.
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 fiscal 1996 were
$18.1 million, up 15.8% from sales of $15.6 million for
the same period of fiscal 1995. The year to year
increase in sales occurred due to an increased demand
for: magnetic sensor (Hall Effect) products, which are
related to a new automotive theft deterrent system;
chips used in the production of computer modems;
commercial discrete devices and commercial
optoelectronic assemblies. Over the same period in
fiscal 1995 Commercial sales increased by $1.5
million, Automotive sales increased by $.7 million and
Hi-Rel sales increased by $.3 million.
Cost of sales in the second quarter of 1996 was $10.3
million, or 57.3% of net sales versus $9.6 million, or
61.6% in the second quarter of 1995. The improvement
resulted from increased sales volume without a
corresponding significant increase in the fixed costs
of operations; favorable exchange rates in Mexico and
continued efforts to improve manufacturing cycle times
and to hold costs at or below budgeted levels.
Product development and engineering expenses in the
second quarter of 1996 were $1.3 million, or 7.2% of
sales, versus $1.0 million, or 6.1% of sales, in the
second quarter of 1995. The increase from 1995 to 1996
is primarily the result of increased spending to
support new product development programs.
Selling expenses of $1.3 million in the second quarter
of 1996 were 7.4% of sales. This compares to $1.0 mil
lion, or 6.7% of sales in the second quarter of 1995.
This change is due to increased sales activity and
expenditures made in the second quarter to upgrade and
refurbish the office area for sales and customer
service.
General and administrative expenses of $.8 million, or
4.6% of sales in the second quarter of fiscal 1996 were
at essentially the same level as the second quarter
1995 expenses.
Other expenses of $.3 million, or 1.7% of sales, were
down during the second quarter of 1996. This compares
to $1.1 million, or 7.0% of sales, in the same period
of 1995. The decrease in expense was primarily the
result of lower interest expense resulting from
reduction of long-term debt.
As a result, net income for the second quarter of 1996
was $3.6 million, or $0.47 per share, compared to the
second quarter 1995 profit of $2.0 million, or $.29 per
share.
Net sales for the first six months of fiscal 1996 were
$33.1 million, up 14.8% from sales of $28.8 million for
the same period of fiscal 1995. The year to year
increase in sales was due to higher demand for:
magnetic sensor (Hall Effect) products, which are
related to a new automotive theft deterrent system;
chips used in the production of computer modems; and
commercial optoelectronic assemblies. Over the same
period in fiscal 1995 Commercial sales increased by
$2.6 million, Automotive sales increased by $1.6
million and Hi-Rel sales increased by $.1 million.
Cost of sales in the first six months of 1996 was $19.5
million, or 59.0% of net sales versus $18.4 million, or
63.9% in the first six months of 1995. The improvement
resulted from increased sales volume without a
substantial corresponding increase in the fixed costs
of operations; favorable exchange rates in Mexico and
continued efforts to improve manufacturing cycle times
and to hold costs at or below budgeted levels.
Product development and engineering expenses in the
first six months of 1996 were $2.5 million, or 7.4% of
sales, versus $1.8 million, or 6.2% of sales, in the
first six months of 1995. The increase from 1995 to
1996 is primarily the result of increased spending to
support new product development programs.
Selling expenses of $2.6 million in the first six
months of 1996 were 8.0% of sales. This compares to $
2.0 million, or 7.0% of sales in the first six months
of 1995. This change is due to increased sales
activity and expenditures made in the second quarter to
upgrade and refurbish the office area for sales and
customer service.
General and administrative expenses of $1.7 million, or
5.0% of sales in the first six months of fiscal 1996
compares with $1.4 million, or 4.9% of sales in the
first six months of 1995.
Other expenses of $.7 million, or 2.2% of sales, were
down during the first six months of 1996. This
compares to $1.9 million, or 6.9% of sales, in the same
period of 1995. The decrease in expense was primarily
the result of lower interest expense resulting from the
reduction of long-term debt.
As a result, net income for the first six months of
1996 was $5.7 million or $0.75 per share compared to
the first six months of 1995 profit of $2.9 million or
$.42 per share.
Liquidity and Capital Resources
As reflected in the Company's consolidated cash flows,
Optek generated approximately $6.0 million in cash from
operations in the first six months of fiscal year 1996.
The largest single use of cash continues to be the
reduction of the Company's outstanding debt,
approximately $5.7 million in the first six months of
this year. Operating cash flows for the first six
months of fiscal year 1995 were approximately $5.0
million. 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 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.
The Company is currently in compliance with the
financial and other covenants contained in its loan
documents. 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.
Income Taxes
The Company adopted Financial Accounting Standards No.
109, "Accounting for Income Taxes," during the first
quarter of 1994 and the adoption was not material to
the consolidated financial statements.
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: May 13, 1996 By: /s/ Thomas R.
Filesi .
Thomas R. Filesi
President and CEO
(Principal Executive Officer)
Date: May 13, 1996 By: /s/ Daniel M.
Bankus .
Controller
Acting Financial Officer
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This 1996 second quarter schedule contains summary financial information
extracted from SEC Form 10-Q and is qualified in its entirety by reference to
to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-27-1995
<PERIOD-END> APR-26-1996
<CASH> 727
<SECURITIES> 0
<RECEIVABLES> 7226
<ALLOWANCES> 1313
<INVENTORY> 5184
<CURRENT-ASSETS> 13254
<PP&E> 34047
<DEPRECIATION> 21932
<TOTAL-ASSETS> 25496
<CURRENT-LIABILITIES> 8372
<BONDS> 0
0
0
<COMMON> 38
<OTHER-SE> 23295
<TOTAL-LIABILITY-AND-EQUITY> 25496
<SALES> 33091
<TOTAL-REVENUES> 33091
<CGS> 19512
<TOTAL-COSTS> 23388
<OTHER-EXPENSES> 710
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 857
<INCOME-PRETAX> 5993
<INCOME-TAX> 329
<INCOME-CONTINUING> 5664
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5664
<EPS-PRIMARY> .75
<EPS-DILUTED> .75
</TABLE>
