OPTEK TECHNOLOGY INC, 424B1, 1997-06-17

OPTEK TECHNOLOGY INC
424B1, 1997-06-17
SEMICONDUCTORS & RELATED DEVICES

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<PAGE> 1
Filed Pursuant to Registrant Rule 424(b)(1)
Registration No. 333-27055
PROSPECTUS

950,000 SHARES

OPTEK TECHNOLOGY, INC.

COMMON STOCK

All of the shares of common stock (the "Common Stock") of Optek Technology,
Inc. ("Optek" or the "Company") offered by this Prospectus are being sold by
Allstate Insurance Company (the "Selling Stockholder"). See "Principal and
Selling Stockholders." The Company will not receive any proceeds from the sale
of shares of Common Stock by the Selling Stockholder.

The Common Stock is quoted on the Nasdaq National Market under the symbol
"OPTT." On June 16, 1997, the last reported sale price of the Common Stock on
the Nasdaq National Market was $12.5625 per share. See "Price Range of Common
Stock."

SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR A DISCUSSION OF FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
---------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
=============================================================================================================
PRICE TO UNDERWRITING PROCEEDS TO SELLING
PUBLIC DISCOUNTS(1) STOCKHOLDER
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share $12.50 $0.84 $11.66
- -------------------------------------------------------------------------------------------------------------
Total(2)(3) $11,875,000 $798,000 $11,077,000
=============================================================================================================
</TABLE>

(1) The Company and the Selling Stockholder have agreed to indemnify the
Underwriter against certain liabilities, including liabilities arising under
the Securities Act of 1933, as amended. See "Underwriting."

(2) The Company has agreed to pay expenses of the offering estimated at
$100,000.

(3) The Selling Stockholder has granted the Underwriter an option for 30 days to
purchase up to an additional 78,230 shares of Common Stock at the Price to
Public less the Underwriting Discount solely to cover over-allotments, if
any. If such option is exercised in full, the total Price to Public,
Underwriting Discount and Proceeds to Selling Stockholder will be
$12,852,875, $863,713, and $11,989,162, respectively. See "Underwriting."
---------------------

The shares of Common Stock are offered by the Underwriter specified herein,
subject to receipt and acceptance by it and subject to the right to reject any
order, in whole or in part. It is expected that delivery of the certificates
representing the shares will be made against payment therefor in Chicago,
Illinois on or about June 20, 1997.

ABN AMRO CHICAGO CORPORATION

JUNE 16, 1997.
<PAGE> 2

OPTEK TECHNOLOGY, INC.

The following chart sets forth selected customer applications which utilize
the Company's sensor technology and the percentage of fiscal 1996 net sales by
product group.

Diagram is a pie chart showing various product groups and their
percentage, as follows:

<TABLE>
<S> <C> <C> <C> <C>
Office Equipment 37
Industrial 26
Automotive 19
Aerospace/Defense 9
Medical 6
Communications 3
</TABLE>

Examples of applications in each group are also described as follows:

Office Equipment: ATM Machines, Check Readers, Computer Tape Drives,
Credit Card Readers, Mail Sorters, Photocopiers,
Point of Sale Terminals, Postal Machines, Printers,
Ticket Machines

Industrial: Currency & Coin Changers, Electric Motors, Elevator
Door Position Sensors, Filling Station Pumps,
Optical Encoders, Security Systems, Staplers, Toll
Systems, Vending Equipment

Automotive: Cam Position Sensors, Crank Shaft Sensors, Ignition
Lock Theft Deterrent Systems, Power Van Door
Systems

Aerospace/Defense: Air to Air Missile Control Systems, Infantry
Missile Control Systems, Satellite Actuator/Control
Systems, Space Station Actuator/Control Systems,
Tank Ranging Systems

Medical: Defibrillators, Medical Fluid Analyzers, Medical
Fluid Dispensers, Pharmaceutical Dispensers

Communications: Custom Communication Components, LAN Transceivers

INCORPORATION BY REFERENCE

The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of such person, a copy of any and all of the documents
incorporated by reference herein (other than exhibits to such documents, unless
such exhibits are specifically incorporated by reference in such documents). See
"Information Incorporated by Reference." Requests for such copies should be
directed to the Secretary, Optek Technology, Inc., 1215 West Crosby Road,
Carrollton, Texas 75006, telephone number (972) 323-2200.

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING OVER-ALLOTMENT, STABILIZING TRANSACTIONS, SYNDICATE SHORT COVERING
TRANSACTIONS AND PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."

2
<PAGE> 3

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements and related notes thereto
appearing elsewhere in this Prospectus or incorporated by reference herein. All
references in this Prospectus to "Optek" or the "Company," unless the context
indicates otherwise, refer to Optek Technology, Inc. and its wholly-owned
subsidiaries. Unless otherwise indicated, this Prospectus assumes the
Underwriter's over-allotment option is not exercised. See "Underwriting."

THE COMPANY

Optek is a leading designer and manufacturer of electronic sensor
components and assemblies that detect motion and position for a broad range of
applications. The Company utilizes optoelectronic and magnetic field sensing
technologies to target non-standard applications that require specialized
engineering and manufacturing expertise. The Company sells its products for end
use by original equipment manufacturers (OEMs) in the office equipment,
automotive, industrial, aerospace/defense, medical and communications markets.
The Company believes that in many cases it is the sole source supplier for
specific components and assemblies necessary for its customers' applications. In
fiscal 1996, major customers included General Motors Corporation, Pitney Bowes,
Inc., Xerox Corporation and International Business Machines Corporation.

Prior to fiscal 1992, the Company's sales to the automotive market were not
significant (less than 2% of net sales in fiscal 1991). In fiscal 1992, the
Company began production and sale of magnetic field sensors for automotive
applications and continued efforts to identify additional applications. As a
result of this strategic pursuit of the automotive market, by fiscal 1996
automotive sales represented approximately 19% of net sales. Because of the
Company's engineering and manufacturing expertise and customer relationships,
the Company has been awarded several additional long-term automotive programs.
Sensor components and assemblies are being used increasingly by the automotive
industry to improve emission control, fuel economy, safety and performance,
while reducing warranty costs. As a result of this increasing demand and the
Company's strategy to capitalize on trends in the automotive industry, including
single sourcing, that favor high quality, reliable suppliers who provide custom
design and testing capabilities, the Company believes that the automotive market
represents its most significant opportunity for growth.

The Company's business objective is to continue to increase net sales and
earnings through the design, manufacture and sale of application specific
electronic sensors to a diverse worldwide customer base via multiple sales
channels. To achieve its objective, the Company has implemented a strategy to:
(i) take advantage of the increasing demand for sensors; (ii) continue to focus
on application and customer specific products; (iii) broaden and diversify its
customer base; (iv) utilize multiple sales channels for effective market
coverage; (v) further enhance its vertically integrated manufacturing
capabilities; (vi) expand its technology base and (vii) provide timely delivery
of high quality products.

The Company's manufacturing operations are vertically integrated with
facilities located in Carrollton, Texas and Juarez, Mexico. In order to realize
significantly reduced labor costs, substantially all of the Company's products
are assembled in facilities operated by the Company in Juarez, Mexico. The
Company markets its products through its own technical sales staff, independent
manufacturers' representatives and independent stocking distributors.

In the last three fiscal years, the Company has experienced growth in sales
and profitability. The Company's net sales have increased from $55.6 million in
fiscal 1994 to $67.4 million in fiscal 1996. In addition, operating income has
improved from $7.2 million in fiscal 1994 to $15.2 million in fiscal 1996. In
the first six months of fiscal 1997, net sales and operating income increased
5.6% and 6.4%, respectively, compared to the first six months of fiscal 1996.
Having overcome financial and operational difficulties in the early 1990s and
having successfully repositioned the Company to focus on its core competencies
in designing and manufacturing high quality custom sensor components and
assemblies, the Company believes it has the technological expertise,
manufacturing capabilities and financial resources to capture opportunities in
the expanding worldwide sensor market.

3
<PAGE> 4

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Selling Stockholder............ 950,000 shares
Common Stock to be outstanding after the Offering.......... 4,072,187 shares(1)
Nasdaq National Market symbol.............................. OPTT
</TABLE>

---------------------

(1) Excludes, as of May 2, 1997, (i) 790,885 shares issuable upon exercise
of outstanding director and employee stock options, of which options
for 356,286 shares are immediately exercisable, and (ii) 3,360,468
shares issuable upon exercise of warrants to purchase Common Stock
which are immediately exercisable.

SUMMARY CONSOLIDATED FINANCIAL DATA

<TABLE>
<CAPTION>
SIX MONTHS
FISCAL YEAR ENDED ENDED
------------------------------------------------------- ------------------
OCT. 30, OCT. 29, OCT. 28, OCT. 27, OCT. 25, APR. 26, MAY 2,
1992(1) 1993(1) 1994(1)(2) 1995(2) 1996(2) 1996(2) 1997
-------- -------- ----------- -------- -------- -------- -------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales......................... $58,403 $55,878 $55,625 $62,542 $67,395 $33,091 $34,940
Operating income (loss)........... (1,494) (5,272) 7,229 13,098 15,186 6,703 7,132
Earnings (loss) before income
taxes........................... (5,897) (10,059) 3,179 9,996 14,039 5,993 6,970
Net earnings (loss)............... (5,897) (10,059) 3,179 9,838 12,895 5,664 4,531
Net earnings(loss) per common and
common equivalent share......... $ (1.81) $ (3.12) $ 0.47 $ 1.40 $ 1.69 $ 0.75 $ 0.59
Weighted average number of common
and common equivalent
shares(3)....................... 3,250 3,224 7,108 7,027 7,627 7,495 7,589
</TABLE>

<TABLE>
<CAPTION>
OCT. 25, MAY 2,
1996 1997
BALANCE SHEET DATA: -------- -------
<S> <C> <C>
Working capital............................................. $ 6,658 $ 8,604
Total assets................................................ 25,886 27,013
Long-term debt.............................................. 3,428 1
Stockholders' equity........................................ 14,067 18,917
</TABLE>

- ---------------

(1) Results for fiscal 1992, 1993 and 1994 include non-recurring charges of $5.0
million, $8.3 million and $1.3 million, respectively, relating to (i)
restructuring charges; (ii) write-off of excess and obsolete inventory;
(iii) losses from the Company's local area network business which was sold
in fiscal 1994; and (iv) amortization of deferred development costs. See
"Selected Consolidated Financial Data."

(2) Results for fiscal 1994, 1995 and 1996 and the first six months of fiscal
1996 include tax benefits resulting from utilization of net operating loss
carryforwards during those periods of $305,000, $3.9 million, $3.2 million
and approximately $2.1 million, respectively. All such carryforwards were
fully utilized during fiscal 1996.

(3) Includes the dilutive effect of outstanding director and employee stock
options and warrants to purchase Common Stock.
4
<PAGE> 5

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Certain statements contained in this Prospectus or incorporated herein by
reference, such as those concerning the Company's business strategy, the
expected future demand for sensor products, capital requirements and other
statements regarding matters that are not historical facts are forward-looking
statements (as such term is defined under the Securities Act of 1933, as amended
(the "Securities Act")). Because such forward-looking statements include risks
and uncertainties, actual results may differ materially from those expressed in
or implied by such forward-looking statements. Factors that could cause actual
results to differ materially include, but are not limited to, those discussed
herein under "Risk Factors," "Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Business" and the documents incorporated
by reference herein. The Company undertakes no obligation to release publicly
the results of any revisions to these forward-looking statements that may be
made to reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.

RISK FACTORS

AN INVESTMENT IN THE COMMON STOCK OFFERED BY THIS PROSPECTUS INVOLVES
CERTAIN RISKS. PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE RISK FACTORS
SET FORTH BELOW, AS WELL AS THE OTHER INFORMATION SET FORTH IN THIS PROSPECTUS
OR INCORPORATED HEREIN BY REFERENCE, PRIOR TO MAKING ANY INVESTMENT IN THE
COMMON STOCK.

DEPENDENCE ON AUTOMOTIVE INDUSTRY

The automotive industry, which accounted for approximately 19% of the
Company's net sales during fiscal 1996, represents the fastest area of growth
for the Company. The automotive industry is cyclical due to general economic
conditions, the level of interest rates, consumer confidence, patterns of
consumer spending and the automobile replacement cycle, all of which are beyond
the control of the Company. In addition, the Company's customers in the
automotive industry are highly unionized and have in the past experienced labor
disruptions. Accordingly, automotive production may not increase or may decline
in the future. A significant reduction or prolonged interruption in automotive
production could have a material adverse effect on the Company.

Many products sold to the automotive industry are model, engine or system
specific and, therefore, have life cycles generally ranging from three to
fifteen years. Three to five year product development cycles requiring
substantial design and qualification requirements are customary in the sourcing
decisions of automotive OEMs. The inability of the Company to develop new
products to replace products whose life cycles come to an end or the lack of
success of any particular car model, engine or system, the success of which is
beyond the control of the Company, could have a material adverse effect on the
Company.

The Company's primary automotive customer has required certain of its
suppliers, including the Company, to meet QS9000 quality standards by the end of
calendar year 1997. Although the Company anticipates receiving certification
with respect to these standards by the required date, failure to do so could
have a material adverse effect on the Company.

There is continuing pressure from the major automotive OEMs to reduce
costs, including costs associated with outside suppliers such as the Company.
The Company believes that its ability to remain competitive and maintain its
profit margins at current levels will depend on its ability to develop new
products, to work with its customers to reduce costs on existing products and to
continue controlling its own operating expenses.

PRODUCT LIFE CYCLES

In addition to its automotive products, many products sold by the Company
are application specific and, therefore, have life cycles generally ranging from
three to fifteen years. Three to five year product development cycles requiring
substantial design and qualification requirements are customary in the sourcing
decisions of OEMs. The inability of the Company to develop new products to
replace products whose life cycles come to an end could have a material adverse
effect on the Company.

5
<PAGE> 6

FOREIGN MANUFACTURING OPERATIONS

In order to realize significantly reduced labor costs, substantially all of
the Company's components and assemblies, which accounted for approximately 81%
of the Company's net sales in fiscal 1996, are produced in facilities operated
by the Company in Juarez, Mexico. Mexico has enacted legislation to promote the
use of such manufacturing operations by foreign companies and continuation of
these operations depends upon: compliance with applicable laws and regulations
of the United States and Mexico; the availability of less expensive labor; and
the continuation of favorable exchange rates. These operations are authorized to
operate as Maquiladoras by the Ministry of Commerce and Industrial Development
of Mexico. Maquiladora status allows the Company to wholly own its Mexican
subsidiaries and to import items into Mexico duty free, provided that such
items, after processing, are re-exported from Mexico within six months.
Maquiladora status, which must be renewed every two years, is subject to various
restrictions and requirements, including: compliance with the terms of the
Maquiladora program; proper utilization of imported materials; hiring and
training of Mexican personnel; compliance with tax, labor, exchange control and
notice provisions and regulations; and compliance with locational constraints.

Although assembly operations in Mexico continue to be less expensive than
comparable operations in the United States, in recent years many companies have
established Maquiladora operations in the Juarez area to take advantage of lower
labor costs. Increasing demand for labor, particularly skilled labor and
professionals, from new and existing Maquiladora operations could result in
increased labor costs. The Company may be required to make additional
investments in automating equipment to partially offset increased labor costs.

The loss of Maquiladora status, the inability to recruit, hire and retain
qualified employees, a significant increase in labor costs, unfavorable exchange
rates or interruptions in the trade relations between the United States and
Mexico could have a material adverse effect on the Company.

CUSTOMER CONCENTRATION

During fiscal 1996, the Company's ten largest customers accounted for
approximately 62% of net sales. Two customers, General Motors Corporation and
Pitney Bowes, Inc., each accounted for approximately 11% of the Company's net
sales for fiscal 1996. Loss of, or the failure to replace, any significant
portion of sales to any significant customer could have a material adverse
effect on the Company.

There is continuing pressure from OEMs to reduce costs, including costs
associated with outside suppliers such as the Company. The Company believes that
its ability to remain competitive and maintain its profit margins at current
levels will depend on its ability to develop new products, to work with its
customers to reduce costs on existing products and to continue controlling its
own operating expenses.

RESTRICTIVE ARRANGEMENTS WITH FIRST SOURCE

Under the terms of the Company's credit facility with its lender, First
Source Financial, Inc. ("First Source"), the Company is required, if certain
events occur, to pay First Source additional interest of $2.4 million. The
triggering events are any consolidation or merger or sale, transfer or other
disposition of all or substantially all of the Company's property, assets or
business, other than a consolidation or merger of the Company with a
wholly-owned subsidiary of the Company, or any prepayment of the Company's debt
to First Source from the proceeds of a public offering or private placement of
its debt or equity securities or other financing. The requirement to pay this
amount upon the occurrence of any of these events could make more expensive, and
therefore delay or prevent, certain transactions involving the Company,
including an otherwise desirable acquisition of the Company by a third party.

Under the terms of the Company's credit facility and the warrant to
purchase Common Stock issued to First Source, the Company is restricted from
certain transactions without the consent of First Source. These transactions
include, but are not limited to, the declaration of dividends, the issuance or
redemption of equity securities, disposition of more than 10% of the Company's
assets, entering into certain leasing arrangements, certain transactions with
its officers, directors and employees, completion of a public offering of debt
or equity securities by the Company, and acquisitions and mergers, excluding
acquisitions for which disclosure of separate financial statements would not be
required under applicable federal securities regulations. To the extent the

6
<PAGE> 7

Company is prohibited from entering into these transactions, such restrictions
may have a material adverse effect on the Company.

REGISTRATION RIGHTS

After giving effect to the sale of Common Stock by the Selling Stockholder,
six beneficial owners hold rights to register up to 3,455,935 shares of Common
Stock under the Securities Act. The largest single block of these shares
entitled to registration rights is subject to a warrant to purchase Common Stock
held by First Source. The warrant grants to First Source the right to purchase
3,150,000 shares of Common Stock at a current price of $0.50 per share. The
exercise price is subject to adjustment in the event the Company fails to meet
certain performance criteria. The exercise price and number of shares are also
subject to adjustment upon the occurrence of certain events in order to address
dilution. The warrant expires on October 31, 1998. Pursuant to the terms of the
warrant, First Source may require the Company to file a registration statement
under the Securities Act on two occasions at the Company's expense and on two
occasions at First Source's expense with respect to shares of Common Stock which
may be acquired pursuant to the warrant. The Company is required to use its best
efforts to effect such registration, subject to certain conditions and
limitations. Further, whenever the Company proposes to register under the
Securities Act any of its securities (other than securities to be issued solely
to employees or pursuant to a reorganization of the Company) either for its own
account or for the account of other security holders exercising registration
rights, the Company is required to notify First Source of the proposed
registration and to include, at the Company's expense, all Common Stock which
First Source may request in such registration, subject to certain conditions and
limitations. The existence or exercise of these rights may have an adverse
effect on the market price of the Common Stock.

By virtue of contractual limitations placed upon these registration rights,
First Source and James D. Crownover, the holder of 282,602 shares of Common
Stock, have agreed not to sell or otherwise dispose of their shares for a period
of ninety (90) days after the effective date of this Registration Statement.

COMPETITION

The Company competes with a range of companies for the custom
optoelectronic and magnetic sensor requirements of OEMs producing office
equipment, automotive products, industrial products, specialized
aerospace/defense and medical applications and communications equipment. Certain
of its competitors are companies which are larger, more diversified and have
greater financial resources than the Company. The Company believes that its
principal competitor for sales of custom sensor components and assemblies is
Honeywell, Inc. Competition in the sensor markets served by the Company is
primarily based upon custom design capabilities, quality, technology,
responsiveness and timely delivery. While the Company believes that its custom
design capabilities, quality, responsiveness, engineering and operating
efficiencies are competitive advantages, no assurance can be given that the
Company will be able to successfully compete with its competitors.

TECHNOLOGICAL CHANGE

There can be no assurance that the Company will be able, for financial or
other reasons, to anticipate and respond to technological changes which may be
necessary to satisfy customer needs. While the Company is currently unaware of
any technology that would have an adverse effect on its business, there can be
no assurance that products or technologies developed by others will not render
the Company's products obsolete or non-competitive.

RELIANCE ON KEY PERSONNEL

Thomas R. Filesi joined the Company in April 1991 and has been its
President and a Director since that time. Mr. Filesi has been primarily
responsible for directing the corporate strategy which has resulted in the
improving financial condition of the Company. Although the Company believes that
it has a highly qualified senior management team, the loss of Mr. Filesi's
services could have a material adverse effect on the Company. The Company has
entered into an employment agreement with Mr. Filesi having a term of three
years with

7
<PAGE> 8

evergreen provisions extending the term for an additional year unless either
party gives notice of intent not to renew at least six months prior to the end
of each year of service.

ANTI-TAKEOVER PROVISIONS OF DELAWARE LAW

The Company is subject to Section 203 of the Delaware General Corporation
Law which, subject to certain exceptions, prohibits a publicly held Delaware
corporation from engaging in a business combination (which includes a merger,
asset sale or other transaction resulting in a financial benefit to the
interested stockholder) with an "interested stockholder" (defined generally as
any person who beneficially owns 15% or more of the outstanding voting stock of
the Company or any person affiliated with such person) for a period of three
years following the date of the transaction in which the person became an
interested stockholder, unless (i) prior to such date the board of directors of
the corporation approved either the business combination or the transaction
which resulted in the stockholder becoming an interested stockholder, or (ii)
upon consummation of the transaction which resulted in the stockholder becoming
an interested stockholder, the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced, excluding for purposes of determining the number of shares
outstanding those shares owned (x) by persons who are directors and also
officers and (y) by employee stock plans in which the employee participants do
not have the right to determine confidentially whether shares held subject to
the plan will be tendered in a tender or exchange offer, or (iii) on or
subsequent to such date the business combination is approved by the board of
directors and authorized at an annual or special meeting of stockholders, and
not by written consent, by the affirmative vote of at least 66 2/3% of the
outstanding voting stock which is not owned by the interested stockholder.

PRICE RANGE OF COMMON STOCK

The Common Stock is traded on the Nasdaq National Market under the trading
symbol "OPTT." The following table sets forth the quarterly high and low sale
prices (to the nearest 1/8) of a share of Common Stock for each quarterly
period subsequent to relisting on the Nasdaq Stock Market on April 22, 1996, and
the high and low bid prices from October 31, 1994 through April 21, 1996 as
reported by various market makers. Bid prices represent quotations between
dealers in securities without adjustment for retail mark-ups, mark-downs or
commissions, and may not necessarily represent actual transactions.

<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
1995 Fiscal Year
First Quarter............................................. $ 1 5/8 $ 1 1/4
Second Quarter............................................ 2 5/8 1 1/2
Third Quarter............................................. 5 2 1/2
Fourth Quarter............................................ 7 3/4 5
1996 Fiscal Year
First Quarter............................................. 8 1/4 7
Second Quarter............................................ 14 9
Third Quarter............................................. 15 3/4 9 5/8
Fourth Quarter............................................ 11 1/4 9
1997 Fiscal Year
First Quarter............................................. 13 7/8 9
Second Quarter............................................ 14 1/8 10 1/2
Third Quarter (through June 16, 1997)..................... 13 1/8 11
</TABLE>

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<PAGE> 9

SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data presented below at October 30,
1992; October 29, 1993; October 28, 1994; October 27, 1995 and October 25, 1996
and for the fiscal years then ended are derived from the Company's consolidated
financial statements, which have been audited by KPMG Peat Marwick LLP,
independent certified public accountants, and which are incorporated by
reference herein. The selected consolidated financial data presented below for
the Company at April 26, 1996 and May 2, 1997 and for the six month fiscal
periods then ended are derived from the unaudited consolidated financial
statements of the Company which are incorporated by reference herein. The
unaudited consolidated financial data have been prepared on a consistent basis
with the audited financial statements and in the opinion of management include
all adjustments, consisting only of normal recurring adjustments, which are
necessary for a fair presentation of the financial position and results of
operations of the Company for the periods covered thereby. Results for interim
periods are not necessarily indicative of those to be expected for the year. The
selected consolidated financial data set forth below should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Company's Consolidated Financial Statements
and the related Notes thereto incorporated by reference herein.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS ENDED
---------------------------------------------------- ------------------
OCT. 30, OCT. 29, OCT. 28, OCT. 27, OCT. 25, APR. 26, MAY 2,
1992 1993(1) 1994(2) 1995(2) 1996(2) 1996(2) 1997
-------- -------- -------- -------- -------- -------- -------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales................................. $ 58,403 $ 55,878 $55,625 $62,542 $67,395 $33,091 $34,940
Cost of sales(3).......................... 43,151 46,499 38,269 38,513 39,010 19,644 20,849
-------- -------- ------- ------- ------- ------- -------
Gross profit.............................. 15,252 9,379 17,356 24,029 28,385 13,447 14,091
Product development and engineering
expenses................................ 4,089 3,968 3,591 3,841 4,933 2,450 2,647
Selling, general and administrative
expenses................................ 9,057 7,498 6,536 7,090 8,266 4,294 4,312
Provision for restructuring costs......... 3,600 2,292 -- -- -- -- --
Reduction in value of deferred development
costs................................... -- 893 -- -- -- -- --
-------- -------- ------- ------- ------- ------- -------
Operating income (loss)................... (1,494) (5,272) 7,229 13,098 15,186 6,703 7,132
Other (income) expense:
Interest expense........................ 3,788 3,952 3,685 2,960 1,292 857 81
Other, net.............................. 615 835 365 142 (145) (147) 81
-------- -------- ------- ------- ------- ------- -------
Total other expenses............. 4,403 4,787 4,050 3,102 1,147 710 162
-------- -------- ------- ------- ------- ------- -------
Earnings (loss) before income taxes....... (5,897) (10,059) 3,179 9,996 14,039 5,993 6,970
Income tax expense........................ -- -- -- 158 1,144 329 2,439
-------- -------- ------- ------- ------- ------- -------
Net earnings (loss)..................... $ (5,897) $(10,059) $ 3,179 $ 9,838 $12,895 $ 5,664 $ 4,531
======== ======== ======= ======= ======= ======= =======
Net earnings (loss) per common share...... $ (1.81) $ (3.12) $ 0.47 $ 1.40 $ 1.69 $ 0.75 $ 0.59
======== ======== ======= ======= ======= ======= =======
Weighted average number of common and
common equivalent shares
outstanding(4).......................... 3,250 3,224 7,108 7,027 7,627 7,495 7,589
</TABLE>

<TABLE>
<CAPTION>
AS OF
-------------------------------------------------------------------------
OCT. 30, OCT. 29, OCT. 28, OCT. 27, OCT. 25, APR. 26, MAY 2,
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit)................ $(25,081) $ 6,865 $ 4,830 $ 4,028 $ 6,658 $ 4,882 $ 8,604
Total assets............................. 48,651 32,146 27,827 26,065 25,886 24,872 27,013
Total current liabilities................ 50,789 7,920 8,159 9,175 7,982 7,748 7,695
Long-term debt........................... 111 36,472 28,692 15,996 3,428 10,279 1
Stockholders' equity (deficit)(5)........ (2,302) (12,340) (9,148) 810 14,067 6,757 18,917
</TABLE>

- ---------------
(1) Results for fiscal 1993 include losses from the Company's local area network
business, which was sold in fiscal 1994, of approximately $1.5 million.

(3) For fiscal 1992, 1993 and 1994, cost of sales includes $1.4 million, $3.6
million and $1.3 million, respectively, for write-off of excess and obsolete
inventory.

(4) Includes the dilutive effect of outstanding director and employee stock
options and warrants to purchase Common Stock.

(5) The Company declared no cash dividends during the periods presented.

9
<PAGE> 10

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

Optek is a leading designer and manufacturer of electronic sensor
components and assemblies that detect motion and position for a broad range of
applications. The Company utilizes optoelectronic and magnetic field sensing
technologies to target non-standard applications that require specialized
engineering and manufacturing expertise. The Company sells its products for end
use by OEMs in the office equipment, automotive, industrial, aerospace/defense,
medical and communications markets. The Company believes that in many cases it
is the sole source supplier for specific components and assemblies necessary for
its customers' applications. In fiscal 1996, major customers included General
Motors Corporation, Pitney Bowes, Inc., Xerox Corporation and International
Business Machines Corporation.

The Company was incorporated in Texas in October 1979 as Crown
Semiconductor, Inc. and reincorporated in Delaware in August 1984, changing its
name to Optek Technology, Inc. In July 1988, the Company acquired all of the
assets of the Optoelectronics Division of TRW, Inc. ("TRW"). This included its
primary plants located in Carrollton and Mineral Wells, Texas and Juarez,
Mexico, as well as additional facilities. In order to finance this acquisition,
the Company entered into a $37.0 million credit facility with First Source.

Between fiscal 1989 and fiscal 1991, the Company experienced a decline in
revenues of approximately 10%, due primarily to a general downturn in the
economy and a reduction in sales of its power semiconductor product line due to
the expiration of its largest military contract. During the same period, the
Company suffered a significant decline in profitability resulting from (i)
losses incurred by a subsidiary developing and selling local area network
systems; (ii) failing to control selling, general and administrative expenses
and (iii) interest expense primarily related to the TRW acquisition. In
addition, the Company incurred costs associated with its efforts to develop
magnetic sensor technology for the automotive market. As a result of these
events, the Company incurred substantial losses and was not in compliance with
certain covenants under its credit facility.

In 1991, the Company hired Thomas R. Filesi, the Company's President and
Chief Executive Officer, to develop and implement a recovery plan for the
Company. The recovery plan was implemented over several years and included the
following: (i) significant work force reductions; (ii) consolidation of
facilities; (iii) discontinuance of the power semiconductor product line and
sale of the local area network business; (iv) changes in senior management and
(v) reorganization of manufacturing operations.

A major goal of the reorganization of the Company's manufacturing
operations was to better align production with customer demand through reduction
of manufacturing cycle time. This required a reengineering of manufacturing
processes and resulted in significant reductions in direct labor, manufacturing
overhead, scrap and inventory. The result was a substantial increase in gross
margins, from 20.2% in fiscal 1990 to 31.2% in fiscal 1994. In addition, the
Company realized increased cash flow, lower debt and interest expense and a
return to profitability.

Further supporting the Company's recovery was the successful entrance into
the automotive market. From fiscal 1994 through fiscal 1996, the Company
experienced an approximately 10% compounded annual growth rate in net sales.
During the same period, net sales of automotive products grew at an
approximately 29% compounded annual growth rate. Net sales of automotive
products grew from less than 2% of net sales in fiscal 1991 to approximately 19%
of net sales in fiscal 1996 and represented approximately 21% of net sales
during the first six months of fiscal 1997.

10
<PAGE> 11

The following table sets forth the Company's net sales by product group for
the last three fiscal years:

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-----------------------------------
OCT. 28, OCT. 27, OCT. 25,
1994 1995 1996
--------- --------- ---------
(IN MILLIONS)
<S> <C> <C> <C>
Office equipment............................................ $21.4 $24.8 $24.7
Automotive.................................................. 8.2 9.5 12.9
Industrial.................................................. 15.1 16.0 17.7
Aerospace/defense........................................... 5.2 6.4 5.9
Medical..................................................... 4.4 4.1 4.0
Communications.............................................. 1.3 1.7 2.2
----- ----- -----
Total.............................................. $55.6 $62.5 $67.4
===== ===== =====
</TABLE>

The Company believes that the sale of automotive products represents its
major opportunity for growth over the next several years due to the
proliferation of sensors in automobiles resulting from the expanded use of
microprocessors. The Company expects sales to the office equipment, industrial
and medical markets to experience growth consistent with growth in the economy
in general. Sales to the communications market consist primarily of fiber optic
transmitters and receivers and offer opportunities for additional growth. Sales
to the aerospace/defense market are expected to remain relatively flat or
decline slightly, but opportunities for sales in certain applications may arise
as some manufacturers of aerospace/defense components exit this relatively low
volume market.

Gross margins have continued to increase from 31.2% in fiscal 1994 to 42.1%
in fiscal 1996. The Company is experiencing pressure from OEMs to reduce costs.
In addition to developing new products and increasing sales levels, the
Company's ability to maintain profit margins at current levels will depend on
its ability to work with its customers to reduce costs on existing products and
to continue to control its own operating expenses.

The combined effect of higher sales volumes and improved operating margins
enabled the Company to generate sufficient cash flows to pay down its long term
debt from a high of $39.0 million at the end of fiscal 1992 to $3.4 million at
the end of fiscal 1996. As a result, interest expense was reduced from $4.0
million during fiscal 1993 to $1.3 million during fiscal 1996. The remaining
debt was repaid during the second quarter of fiscal 1997.

Results for fiscal 1994, 1995 and 1996 include tax benefits resulting from
utilization of net operating loss carryforwards for book and tax purposes during
those years of $305,000, $3.9 million, and $3.2 million, respectively. All such
carryforwards were fully utilized during fiscal 1996.

11
<PAGE> 12

RESULTS OF OPERATIONS

The following table sets forth for the periods indicated the percentage
relationship to net sales of certain items in the Company's statements of income
and the percentage changes of such items as compared to the indicated prior
period:

<TABLE>
<CAPTION>
INCREASE (DECREASE)
PERCENTAGE OF NET SALES FROM PRIOR PERIOD
-------------------------------------------------- -------------------------
SIX MONTHS SIX
FISCAL YEAR ENDED ENDED FISCAL YEARS MONTHS
------------------------------ ----------------- ------------- ---------
1994 1995 1996
OCT. 28, OCT. 27, OCT. 25, APR. 26, MAY 2, V. V. V.
1994 1995 1996 1996 1997 1995 1996 1997
-------- -------- -------- -------- ------ ----- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales................... 100.0% 100.0% 100.0% 100.0% 100.0% 12.4% 7.8% 5.6%
Cost of sales............... 68.8 61.6 57.9 59.4 59.7 0.6 1.3 6.1
Product development and
engineering expenses...... 6.5 6.1 7.3 7.4 7.6 7.0 28.4 8.0
Selling expenses............ 7.1 6.8 7.5 8.0 7.4 7.5 19.8 (1.8)
General and administrative
expenses.................. 4.6 4.5 4.7 5.0 4.9 10.0 11.7 3.9
Operating income............ 13.0 20.9 22.5 20.3 20.4 81.2 15.9 6.4
Interest expense............ 6.6 4.7 1.9 2.6 0.2 (19.7) (56.4) (90.5)
Earnings before income
taxes..................... 5.7 16.0 20.8 18.1 19.9 214.4 40.4 16.3
Income taxes................ 0.0 0.3 1.7 1.0 7.0 100.0 624.1 641.3
Net earnings................ 5.7 15.7 19.1 17.1 13.0 209.5 31.1 (20.0)
</TABLE>

Six Months Ended May 2, 1997 Compared to Six Months Ended April 26, 1996

Net sales for the first six months of fiscal 1997 were $34.9 million, up
5.6% compared to net sales of $33.1 million for the first six months of fiscal
1996. This increase was the result of higher automotive net sales of $1.7
million and higher commercial (office equipment, industrial, medical and
communications) net sales of $460,000. Partially offsetting the increase were
lower sales of high reliability (aerospace/defense) products due to
approximately $600,000 of one-time sales in the second quarter of fiscal 1996.

Cost of sales was $20.8 million, or 59.7% of net sales, in the first six
months of fiscal 1997 compared to $19.6 million, or 59.4% of net sales, during
the comparable period of fiscal 1996. This increase in cost of sales as a
percentage of net sales was primarily the result of (i) the reduction in higher
margin aerospace/defense sales from the second quarter of fiscal 1996 as
discussed above, (ii) a change in product mix within the commercial product
group favoring lower margin component products and (iii) costs related to the
preparation for a ramp-up of automotive component production expected to occur
in the second half of fiscal 1997.

Product development and engineering expenses during the first six months of
fiscal 1997 were $2.6 million, or 7.6% of net sales, compared to $2.5 million,
or 7.4% of net sales during the comparable period of the previous fiscal year.

Selling, general and administrative expenses in the first six months of
fiscal 1997 totalled $4.3 million, or 12.3% of net sales, compared to $4.3
million, or 13.0% of net sales, during the comparable period of fiscal 1996. The
decrease in selling, general and administrative expenses as a percentage of net
sales was due to net sales increasing while expenses remained essentially the
same from period to period.

Operating income for the period was $7.1 million, or 20.4% of net sales,
compared to $6.7 million, or 20.3% of net sales, in the first six months of
fiscal 1996. The improvement from fiscal 1996 was the result of the factors
discussed above.

Other expenses, consisting primarily of interest expense, were $162,000 in
the first six months of fiscal 1997 compared to $710,000 in the first six months
of fiscal 1996. This decrease was the result of the continued reduction of long
term debt.

12
<PAGE> 13

Income tax expense during the first six months of fiscal 1997 was $2.4
million compared to $329,000 during the comparable period of fiscal 1996. Tax
expense increased as a result of the Company having fully utilized its remaining
net operating loss carryforwards during fiscal 1996. The Company expects to be
on a fully taxed basis during all of fiscal 1997.

As a result of the factors discussed above, net earnings for the first six
months of fiscal 1997 were $4.5 million versus $5.7 million in the first six
months of fiscal 1996.

Fiscal Year Ended October 25, 1996 Compared to Fiscal Years Ended October 27,
1995 and October 28, 1994

Net sales for fiscal 1996 were $67.4 million versus $62.5 million in fiscal
1995 and $55.6 million in fiscal 1994. The increase from fiscal 1995 to fiscal
1996 was attributable to increases in commercial net sales of $1.9 million and
automotive net sales of $3.4 million offset by a decrease in net sales of high
reliability optoelectronic products of $400,000. The increase from fiscal 1994
to fiscal 1995 was a result of increases in commercial net sales of $4.5
million, automotive net sales of $1.2 million and high reliability
optoelectronics product net sales of $1.2 million.

Cost of sales in fiscal 1996 was 57.9% of net sales versus 61.6% of net
sales in fiscal 1995 and 69.0% of net sales in fiscal 1994. The improvements in
fiscal 1996 and 1995 were the result of higher production volumes resulting in
lower unabsorbed fixed costs, continued efforts to reduce manufacturing cycle
times, favorable exchange rates as well as cost reduction and yield improvement
programs. In addition, fiscal 1995 showed an improvement of $1.2 million, or
approximately 2% of net sales, resulting from the absence of additional
provisions for excess and obsolete inventories versus fiscal 1994.

Product development and engineering expenses in fiscal 1996 were $4.9
million, or 7.3% of net sales, compared to $3.8 million, or 6.1% of net sales in
fiscal 1995 and $3.6 million, or 6.5% of net sales in fiscal 1994. These
expenses were primarily related to the development of new products and
processes. The increase in fiscal 1996 relates to additional development costs
for fiber optic connectors, used in telecommunications, and magnetoresistive
technologies, used primarily in automotive applications. In addition, certain
expenses were incurred to refurbish the engineering and product development
labs. The improvement in the percentage to net sales in fiscal 1995 as compared
to fiscal 1994 was due to net sales increasing at a greater rate than expenses.

Selling, general and administrative expenses in fiscal 1996 were $8.3
million, or 12.3% of net sales, versus 11.3% of net sales in fiscal 1995 and
11.8% of net sales in fiscal 1994. The increase in expenses in fiscal 1996 over
fiscal 1995 was primarily attributable to an increase in sales commissions and
expenses related to refurbishment of the sales and customer service areas.

Operating income was $15.2 million in fiscal 1996, $13.1 million in fiscal
1995 and $7.2 million in fiscal 1994. The improvements in fiscal 1996 and fiscal
1995 were the result of the aforementioned increase in sales volume and
improvements in cost of sales as discussed above.

Other expenses consist primarily of interest expense which decreased in
fiscal 1996 and fiscal 1995 due to the continued reduction of long-term debt.

Income tax expense was $1.1 million, or 1.7% of net sales, in fiscal 1996
versus $200,000, or 0.3% of net sales, in fiscal 1995. This was the result of
the Company fully utilizing its net operating loss carryforwards during fiscal
1996.

As a result of the factors discussed above, net earnings for fiscal 1996
were $12.9 million versus $9.8 million in fiscal 1995 and $3.2 million in fiscal
1994.

LIQUIDITY AND CAPITAL RESOURCES

As reflected in the Company's consolidated statements of cash flows, the
Company generated approximately $6.3 million in cash from operations during the
first six months of fiscal 1997. The largest single use of cash (approximately
$3.4 million) was to retire the Company's outstanding debt.

The Company generated approximately $13.5 million in cash from operations
in fiscal 1996. The largest single use of cash (approximately $12.6 million)
continued to be the reduction of the Company's outstanding

13
<PAGE> 14

debt. The remaining cash was used primarily for capital expenditures. Operating
cash flows were approximately $13.6 million in fiscal 1995 and approximately
$8.0 million in fiscal 1994. The improvement was a direct result of the factors
discussed above under the "Results of Operations."

In fiscal 1997, the Company estimates capital expenditures will be
approximately $3.0 million in the aggregate to support anticipated increases in
demand for the Company's automotive products during fiscal 1998 and 1999. The
Company also anticipates higher expenditures for federal income taxes in fiscal
1997 due to the Company's full utilization of its net operating loss
carryforwards during fiscal 1996.

In the second quarter of fiscal 1997, the Company completely repaid amounts
outstanding under its credit facility with First Source. The credit facility
continues to provide a $10.5 million working capital line. Amounts drawn on the
working capital line bear interest at one-half percentage point over the
reference rate announced from time to time by the First National Bank of
Chicago, Chicago, Illinois and mature on October 31, 1997. The credit facility
expires October 31, 1997, but can be renewed for an additional one year period
at the option of the Company. The credit facility contains certain affirmative
and negative covenants which require the Company, among other things, to
maintain minimum net worth, as defined, and to satisfy certain financial ratios.
The covenants also restrict investments, capital expenditures and additional
debt and prohibit payment of dividends. The Company was in compliance with all
debt covenants during fiscal 1996.

The Company presently anticipates that it will generate sufficient cash
from operations to meet its obligations, including its capital requirements, for
the foreseeable future. Any unanticipated expansion or contraction of its
business or future acquisitions may require the Company to draw upon its working
capital line or obtain other financing.

SEASONALITY

Because the Company's first fiscal quarter includes the holiday season,
which impacts customer order entry and also includes an annual facilities
shutdown, this quarter has traditionally been the Company's lowest in terms of
net sales and operating income. The following table presents unaudited quarterly
net sales and operating income for each of the Company's last ten fiscal
quarters:

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-------------------------------------------------------------------------------------------------
1995 1996 1997
------------------------------------- ------------------------------------- -----------------
FIRST SECOND THIRD FOURTH FIRST SECOND THIRD FOURTH FIRST SECOND
QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales............ $13,250 $15,584 $16,497 $17,211 $15,040 $18,051 $16,834 $17,470 $16,689 $18,251
Operating income..... 1,781 3,102 4,247 3,968 2,499 4,204 4,275 4,208 3,102 4,030
</TABLE>

NEW ACCOUNTING STANDARDS

In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128 ("SFAS 128"), Earnings per Share,
which establishes new standards for computing and presenting earnings per share.
SFAS 128 is effective for financial statements issued for periods ending after
December 15, 1997 and requires restatement of all prior-period earnings per
share data. Early application of SFAS 128 is not permitted. The Company's
adoption of the provisions of SFAS 128 will result in the dual presentation of
basic and diluted earnings per share on the Company's income statement. Diluted
earnings per share as calculated under SFAS 128 is not expected to materially
differ from primary earnings per share amounts previously presented.

14
<PAGE> 15

BUSINESS

GENERAL

Optek is a leading designer and manufacturer of electronic sensor
components and assemblies that detect motion and position for a broad range of
applications. The Company utilizes optoelectronic and magnetic field sensing
technologies to target non-standard applications that require specialized
engineering and manufacturing expertise. The Company sells its products for end
use by OEMs in the office equipment, automotive, industrial, aerospace/defense,
medical and communications markets. The Company believes that in many cases it
is the sole source supplier for specific components and assemblies necessary for
its customers' applications. In fiscal 1996, major customers included General
Motors Corporation, Pitney Bowes, Inc., Xerox Corporation and International
Business Machines Corporation.

The worldwide sensor market is expected to grow from approximately $9.1
billion in 1995 to approximately $11.8 billion in 1998. The sensor market is
comprised of four major product types: position and proximity; pressure; flow;
and temperature. The Company competes primarily in the position and motion
portion of the position and proximity sensor market, which includes both
standard and custom products. The Company estimates that the global market for
its sensor components and assemblies is approximately $840 million. As the
number of electronic devices incorporated into automobiles and other industrial
and commercial equipment continues to increase, the market for sensors is
projected to continue to expand. Many advanced electronic systems require
electronic inputs from sensors which measure and feed back information on
performance to microprocessors. New sensor applications are driven by government
regulations and customer demand. The automotive, industrial and communications
markets are expected to continue to grow as manufacturers look for ways to
improve the performance, efficiency and accuracy of systems control and
monitoring functions.

BUSINESS STRATEGY

Take Advantage of Increasing Demand for Sensors. The increase in demand for
sensors is expected to continue as electronics are used to automate, enhance and
control more functions in a large and diverse group of products. Microprocessors
are increasingly being incorporated in a wide variety of products. Sensors,
which provide input to the microprocessor, can be added to increase a product's
functionality and/or performance. As a result of the Company's engineering and
manufacturing expertise, the Company believes it is well positioned to take
advantage of the anticipated increased demand for sensors.

Focus on Application and Customer Specific Products. Companies that compete
on the basis of the functionality and performance of their products often
require sensors that are unique and specific to their product. In addition, a
customer's application may necessitate electrical, optical, and mechanical
packaging characteristics which are specific to the application and to the
customer. The Company has structured its operations to effectively and
efficiently handle the design and manufacture of customer specific products in
relatively low to moderate annual unit volumes. A majority of the Company's net
sales are custom sensor components and assemblies. The Company strives to
enhance and leverage its application expertise to help maintain its position as
a leading and innovative manufacturer of custom electronic sensor components and
assemblies and, therefore, limit competition based solely on price.

Broaden and Diversify Customer Base. The Company has in the past and will
continue to focus on broadening and diversifying its customer base. The Company
currently produces sensor products for a wide number of applications over a
diverse range of products. The Company categorizes its markets as office
equipment, automotive, industrial, aerospace/defense, medical and
communications. Within each market the Company has multiple customers and often
provides a customer with multiple sensor products for various product lines.

15
<PAGE> 16

Utilize Multiple Sales Channels for Effective Market Coverage. The Company
sells its products via a combination of eight direct technical sales personnel,
21 independent manufacturers' representatives and 44 electronics parts
distributors, both domestically and internationally. The multiple sales channels
enable more efficient and wider coverage of available markets. The Company's
technical sales personnel, together with the Company's engineering staff, seek
to develop long-term relationships with customers by working closely with them
throughout all phases of new product development and subsequent production. In
addition, independent manufacturers' representatives provide additional market
coverage for the Company. The Company selects representatives on their ability
to effectively interface with its customers' engineers. Distributors are
typically utilized where customers are outsourcing their electronics parts
purchasing and inventory functions. The Company believes that the combination of
its own technical sales people together with independent sales representatives
and distributors allows the Company to market its products on a cost-effective
basis.

Enhance Manufacturing Capabilities as a Competitive Strength. The Company
utilizes its vertically integrated manufacturing structure as a strategic
strength to develop new products and to more effectively compete. The Company's
vertically integrated operations allow it to design, manufacture and test its
products. Integrated manufacturing capabilities enable the Company to rapidly
respond to customer requests for development of new products and design changes
to existing products without the vulnerability to lead times often experienced
when using outside sources. Rapid response in product development is a key
requirement among its customers. The Company's manufacturing capabilities allow
the Company to produce sensor and LED semiconductor chips, tools and plastic
molds, plastic assemblies, discrete, assembly, hybrid and high reliability
components, printed circuit boards and wire and cable assemblies.

Expand Technology Base. The Company endeavors to add to its technology base
as a means to increase the number and variety of customers and applications to
which its sensors can be applied. The Company has successfully added magnetic
field sensor technologies including Hall Effect and more recently magneto-
resistivity. The Company has also extended its optoelectronic technologies by
developing fiber optic communications products. The Company has utilized
internal and external development and may in the future acquire or license new
or enhanced technologies.

Provide Timely Delivery of High Quality Products. The Company utilizes
consistent high product quality as a means to retain customer business and limit
price competition. As customers have moved to "just in time" inventory
management, products are often shipped directly to the production line without
incoming inspection. The Company utilizes advanced machinery and production
techniques, incorporates raw materials conforming to stringent quality standards
and individually tests each of its products in an effort to manufacture products
of consistent high quality and reliability.

16
<PAGE> 17

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The Directors and executive officers of the Company are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Grant A. Dove............................... 68 Director and Chairman of the Board
Thomas R. Filesi............................ 62 Director, President and Chief Executive Officer
Michael E. Cahr............................. 57 Director
William H. Daughtrey, Jr. .................. 57 Director
Rodes Ennis................................. 61 Director
Wayne Stevenson............................. 61 Director
William J. Collinsworth..................... 46 Vice President, Finance and Chief Financial Officer
Richard G. Dahlberg......................... 44 Vice President, Engineering
Thomas S. Garrett........................... 50 Vice President, Operations
Robert J. Kosobucki......................... 45 Vice President, Worldwide Sales and Marketing
</TABLE>

Mr. Dove was elected a Director of the Company in July 1989 and Chairman of
the Board in March 1993. He is currently a managing partner of Technology
Strategies & Alliance, a strategic planning and investment banking firm. He
spent 28 years with Texas Instruments, Inc. retiring in 1987 as Executive Vice
President. He then served as Chairman and Chief Executive Officer of
Microelectronics and Computer Technology Corporation, a research and development
consortium, retiring in 1992. He currently serves on the boards of the Cooper
Cameron Corporation, a public company engaged in oilfield services; U.S. WEST,
Inc., a public company engaged in telecommunications; Control Data Systems,
Inc., a public company engaged in computer systems integration; Intervoice,
Inc., a public company engaged in telecommunications equipment and software
sales; and Fore Front Group, Inc., a public company engaged in personal computer
and internet software.

Mr. Filesi became President and a Director of the Company in April 1991 and
Chief Executive Officer in March 1992. Before joining the Company, he was with
Motorola, Inc. Semiconductor Products Sector for 21 years, completing his tenure
there as Director of Manufacturing, RF Products.

Mr. Cahr was elected a Director of the Company in August 1988. He is
President and Chief Executive Officer of Allscrips Pharmaceuticals, Inc., a
private company engaged in the sale of prepackaged pharmaceuticals, having
served in that capacity since January 1995. Until late 1994 he was Manager of
Venture Capital at Allstate Insurance Company in Northbrook, Illinois, having
been with Allstate Insurance Company since 1987.

Mr. Daughtrey was elected a Director of the Company in March 1992. Mr.
Daughtrey is currently President of Princeton Associates, Inc., a management
consulting firm which he founded in January 1991. On September 1, 1995, JGB
Industries, Inc., a company for which Mr. Daughtrey had formerly served as
interim President and Chief Executive Officer from November 1993 to August 1995,
filed for protection under Chapter 11 of the Bankruptcy Code.

Mr. Ennis was elected a Director of the Company in February 1987. Mr. Ennis
acts as a general management consultant and formerly served as President of the
Journeys and Hardy Divisions of Genesco, Inc., a publicly-owned footwear
retailer, from March 1990 to December 1992.

Mr. Stevenson was elected a Director of the Company in September 1992.
Since 1986, Mr. Stevenson has been the Chairman and Chief Executive Officer of
CSI Control Systems International, Inc., a private firm engaged in the
manufacture and installation of environmental controls for the commercial
market.

Mr. Collinsworth joined the Company as Vice President, Finance, and Chief
Financial Officer in October 1996. From 1991 until joining the Company, he was
an independent financial consultant specializing in start-up and troubled
companies. In that role, he worked with several private companies and also
served as interim Chief Operating Officer and Chief Financial Officer for
Intellicall, Inc., a provider of telecommunications services and equipment, from
April 1992 to September 1993 and Chief Financial Officer for Value Added
Communications, Inc. ("VAC"), a provider of telecommunications services and
equipment, from June 1994 to October 1994. In November 1995, VAC filed for
protection under Chapter 11 of the Bankruptcy Code.

17
<PAGE> 18

Mr. Dahlberg was elected Vice President, Engineering in March 1994. Mr.
Dahlberg has been employed by the Company since 1983 and has served in various
engineering capacities. He is a Registered Professional Engineer in the State of
Texas.

Mr. Garrett joined the Company in October 1991 as Vice President,
Operations. In April 1988, he founded Garrett Consulting Group and was President
of that firm until December 1990, at which time it merged with Northwest
Technology Group, Inc. These companies provided comprehensive consulting
services to the micro-electronics and other high technology related industries.

Mr. Kosobucki joined the Company as Vice President, Worldwide Sales and
Marketing in July 1995. From 1991 until joining the Company, he served in
various strategic marketing and sales capacities for Summagraphics Corp., a
publicly-owned manufacturer of computer-based printers and plotters, most
recently as Director of Strategic Sales and Product Marketing. He is a
Registered Professional Engineer in the State of New York.

18
<PAGE> 19

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth information regarding the Common Stock owned
at May 9, 1997 and as adjusted to reflect the sales of the shares offered by
this Prospectus by (i) each stockholder known to the Company to own beneficially
more than 5% of the Common Stock, (ii) each of the Company's executive officers
and Directors, (iii) all executive officers and Directors as a group, and (iv)
the Selling Stockholder. To the Company's knowledge, the persons named in the
table have sole voting and investment power with respect to all shares of Common
Stock shown as beneficially owned by them, subject to community property laws,
where applicable, and the information contained in the footnotes to the table.

<TABLE>
<CAPTION>
SHARES SHARES
BENEFICIALLY BENEFICIALLY
OWNED BEFORE NUMBER OWNED AFTER
OFFERING(1) OF SHARES OFFERING(1)
-------------------- BEING --------------------
NAME NUMBER PERCENT OFFERED NUMBER PERCENT
---- --------- ------- --------- --------- -------
<S> <C> <C> <C> <C> <C>
First Source Financial, Inc.(2)................. 3,150,000 43.6% -- 3,150,000 43.6%
2850 W. Golf Rd., 5th Floor
Rolling Meadows, IL 60008
Allstate Insurance Company...................... 1,028,230 25.3 950,000 78,230 1.9
3075 Sanders Road G5D
Northbrook, IL 60062
James D. Crownover.............................. 282,602 6.9 -- 282,602 6.9
P.O. Box 7812
Horseshoe Bay, TX 78657
Thomas R. Filesi(3)............................. 358,833 8.7 -- 358,833 8.7
1180 Emerald Sound Blvd.
Oak Point, TX 75068
Grant A. Dove(4)................................ 206,601 4.8 -- 206,601 4.8
15301 Dallas Parkway
Suite 840
Dallas, TX 75248
Michael E. Cahr(5).............................. 43,000 1.1 -- 43,000 1.1
William H. Daughtrey, Jr.(6).................... 4,500 * -- 4,500 *
Rodes Ennis(7).................................. 43,600 1.1 -- 43,600 1.1
Wayne Stevenson(8).............................. 15,750 * -- 15,750 *
William J. Collinsworth......................... 450 * -- 450 *
Richard G. Dahlberg(9).......................... 37,755 * -- 37,755 *
Thomas S. Garrett(10)........................... 92,332 2.3 -- 92,332 2.3
Robert J. Kosobucki(11)......................... 17,998 * -- 17,998 *
All executive officers and Directors as a group
(10 persons)(12).............................. 820,819 18.5 -- 820,819 18.5
</TABLE>

- ---------------

* Less than 1%.

(1) Includes shares of Common Stock not outstanding which are subject to
rights to acquire shares exercisable or to become exercisable within 60
days of May 9, 1997.

(2) Consists of 3,150,000 shares which may be acquired at any time prior to
October 31, 1998 upon exercise of a warrant at a current price of $0.50
per share. The exercise price is subject to adjustment in the event the
Company fails to meet certain performance criteria. The exercise price
and number of shares are also subject to adjustment upon the occurrence
of certain events in order to address dilution.

(3) Includes 36,000 shares which are presently exercisable pursuant to
incentive stock options at a price of $2.31 per share. Also includes
8,500 shares which are presently exercisable at a price of $2.125 per
share, 10,000 shares which are presently exercisable at a price of $6.05
per share and 3,333 shares which are presently exercisable at a price of
$11.97 per share pursuant to options issued under the Company's Long-Term
Stock Investment Plan.

19
<PAGE> 20

(4) Includes 10,000 shares which are presently exercisable at a price of $1.53
per share pursuant to warrants issued to the Company's non-employee
Directors and 3,500 shares which are presently exercisable at a price of
$2.11 per share and 3,500 shares which are presently exercisable at a
price of $1.04 per share pursuant to options awarded under the Company's
Directors' Formula Award Plan. Also includes 8,759 shares which are
presently exercisable at a price of $1.11 per share, 38,462 shares which
are presently exercisable at a price of $0.65 per share and 131,580 shares
which are presently exercisable at a price of $0.19 per share, all
issuable pursuant to warrants issued for services performed by Mr. Dove as
Chairman of the Board during the fiscal quarters ended April 30, 1993,
July 31, 1993 and October 29, 1993.

(5) Includes 10,000 shares which are presently exercisable at a price of $1.53
per share pursuant to warrants issued to the Company's non-employee
Directors and 3,500 shares which are presently exercisable at a price of
$2.11 per share, 3,500 shares which are presently exercisable at a price
of $1.04 per share, 3,500 shares which are presently exercisable at a
price of $0.44 per share, 3,500 shares which are presently exercisable at
a price of $1.83 per share, and 3,500 shares which are presently
exercisable at a price of $11.97 per share pursuant to options awarded
under the Company's Directors' Formula Award Plan. Also includes 5,500
shares owned of record by Mr. Cahr's wife of which Mr. Cahr may be deemed
the beneficial owner.

(6) Includes 3,500 shares which are presently exercisable at a price of $11.97
per share pursuant to options awarded under the Company's Directors'
Formula Award Plan.

(7) Includes 10,000 shares which are presently exercisable at a price of $1.53
per share pursuant to warrants issued to the Company's non-employee
Directors and 3,500 shares which are presently exercisable at a price of
$2.11 per share, 3,500 shares which are presently exercisable at a price
of $1.04 per share, 3,500 shares which are presently exercisable at a
price of $0.44 per share, 3,500 shares which are presently exercisable at
a price of $1.83 per share and 3,500 shares which are presently
exercisable at a price of $11.97 per share pursuant to options awarded
under the Company's Directors' Formula Award Plan.

(8) Includes 1,750 shares which are presently exercisable at a price of $2.18
per share pursuant to options awarded under the Company's Long-Term Stock
Investment Plan and 3,500 shares which are presently exercisable at a
price of $1.04 per share, 3,500 shares which are presently exercisable at
a price of $0.44 per share, 3,500 shares which are presently exercisable
at a price of $1.83 per share and 3,500 shares which are presently
exercisable at a price of $11.97 per share pursuant to options awarded
under the Company's Directors' Formula Award Plan.

(9) Includes 6,666 shares which are presently exercisable at a price of $6.05
per share, and 2,666 shares which are presently exercisable at a price of
$11.97 per share pursuant to options issued under the Company's Long-Term
Stock Investment Plan.

(10) Includes 6,666 shares which are presently exercisable at a price of $6.05
per share and 2,666 shares which are presently exercisable at a price of
$11.97 per share pursuant to options issued under the Company's Long-Term
Stock Investment Plan.

(11) Includes 3,333 shares which are presently exercisable at a price of $3.10
per share, 6,666 shares which are presently exercisable at a price of
$6.05 per share and 2,666 shares which are presently exercisable at a
price of $11.97 per share pursuant to options issued under the Company's
Long-Term Stock Investment Plan.

(12) Includes 89,162 shares which may be acquired upon exercise of employee
stock options presently exercisable, 91,250 shares which are presently
exercisable pursuant to warrants and options issued to the Company's
non-employee Directors, and 178,801 shares which are presently exercisable
pursuant to warrants issued for services rendered.

20
<PAGE> 21

UNDERWRITING

ABN AMRO Chicago Corporation (the "Underwriter") has agreed subject to the
terms and conditions specified in the Underwriting Agreement among the Company,
the Underwriter and the Selling Stockholder (the "Underwriting Agreement") to
purchase from the Selling Stockholder 950,000 shares of Common Stock.

The Underwriting Agreement provides that the obligations of the Underwriter
thereunder are subject to approval of certain legal matters by its counsel and
to various other conditions. The Underwriter is committed to purchase all of the
shares of Common Stock offered hereby, if any are purchased.

The Company and Selling Stockholder have been advised by the Underwriter
that the Underwriter proposes to offer the shares of Common Stock directly to
the public at the public offering price set forth on the cover page of this
Prospectus, and to certain dealers at such price less a concession not in excess
of $0.43 per share and that the Underwriter and such dealers may reallow to
other dealers, including the Underwriter, a discount not in excess of $0.10 per
share. After completion of the Offering, the public offering price and other
selling terms may be changed by the Underwriter.

The Selling Stockholder has granted to the Underwriter an option for 30
days to purchase up to an additional 78,230 shares of Common Stock at the public
offering price per share less the underwriting discount set forth on the cover
page of this Prospectus solely to cover over-allotments, if any.

The Company and the Selling Stockholder have agreed to indemnify the
Underwriter and its controlling persons against certain liabilities under the
Securities Act or to contribute to payments the Underwriter or such persons may
be required to make in respect thereof.

The Underwriter has informed the Company that it does not intend to confirm
sales of Common Stock to any accounts over which it exercises discretionary
authority.

The Company, its directors and executive officers and the Selling
Stockholder have agreed for a period of 90 days after the date of this
Prospectus not to register for sale, sell, offer, contract to sell, grant an
option for sale or otherwise dispose of or transfer any shares of Common Stock
or any securities convertible into or exchangeable or exercisable for Common
Stock without the prior written consent of the Underwriter (excluding certain
issuances of Common Stock by the Company in connection with employee benefit
plans). By virtue of contractual limitations placed upon their registration
rights, First Source, the holder of a warrant to purchase 3,150,000 shares of
Common Stock, and James D. Crownover, the holder of 282,602 shares of Common
Stock, have agreed not to sell or otherwise dispose of their shares for a period
of ninety (90) days after the effective date of the Registration Statement,
which was June 13, 1997.

In connection with this Offering, the Underwriter may engage in
transactions that stabilize, maintain or otherwise affect the market price of
the Common Stock. Such transactions may include stabilization transactions
pursuant to which the Underwriter may bid for or purchase Common Stock for the
purpose of stabilizing its market price. The Underwriter also may create a short
position for the account of the Underwriter by selling more Common Stock in
connection with the Offering than it is committed to purchase from the Selling
Stockholder, and in such case the Underwriter may purchase Common Stock in the
open market following completion of the Offering to cover all or a portion of
such short position. The Underwriter may also cover all or a portion of such
short position by exercising the Underwriter's over-allotment option referred to
above. In addition, the Underwriter may impose "penalty bids" under contractual
arrangements whereby it may reclaim from a dealer participating in the Offering,
for the Underwriter's account, the selling concession with respect to Common
Stock that is distributed in the Offering but subsequently purchased for the
account of the Underwriter in the open market. Any of the transactions described
in this paragraph may result in the maintenance of the price of the Common Stock
at a level above that which might otherwise prevail in the open market. The
imposition of a penalty bid might also affect the price of the Common Stock to
the extent that it could discourage resales of the security. Neither the Company
nor the Underwriter makes any representation or prediction as to the direction
or magnitude of any effect that the transactions described above may have on the
price of the Common Stock. In addition, neither the Company nor the Underwriter
makes any representation that the Underwriter will engage in such transactions
or that such transactions, once commenced, will not be discontinued without
notice.

21
<PAGE> 22

LEGAL MATTERS

The validity of the issuance of the Common Stock offered hereby will be
passed upon for the Company by Hewitt & Hewitt, P.C., Dallas, Texas. Mr. Hewitt,
a principal of Hewitt & Hewitt, P.C., beneficially owns 8,500 shares of Common
Stock and is the Secretary of the Company. Certain legal matters will be passed
upon for the Underwriter by McDermott, Will & Emery, Chicago, Illinois.

EXPERTS

The consolidated financial statements and schedule of Optek Technology,
Inc. as of October 25, 1996 and October 27, 1995, and for each of the years in
the three-year period ended October 25, 1996, have been incorporated by
reference herein and in the Registration Statement in reliance upon the reports
of KPMG Peat Marwick LLP, independent certified public accountants, incorporated
by reference herein, and upon the authority of said firm as experts in
accounting and auditing.

INFORMATION INCORPORATED BY REFERENCE

The following documents have been filed with the Commission (File No.
0-16304) pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and are incorporated herein by reference and made a part of this
Prospectus:

1. The Company's Annual Report on Form 10-K for the year ended October
25, 1996, as amended by Form 10-K/A-1 and Form 10K/A-2;

2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
January 31, 1997 and May 2, 1997 (as amended by Form 10Q/A); and

3. Description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A.

All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Company's Common Stock shall be deemed to
be incorporated herein by reference and made a part of this Prospectus from the
respective filing dates of such documents. Any statement contained in this
Prospectus or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.

22
<PAGE> 23

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Exchange
Act and in accordance therewith files reports, proxy statements, and other
information with the Commission. Such reports, proxy statements, the
Registration Statement related to this Offering and other information filed by
the Company can be inspected, without charge, and copies may be obtained at
prescribed rates, at the public reference facility maintained by the Commission
at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
regional offices of the Commission located at Citicorp Center, 500 West Madison
Street, Room 1400, Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300,
New York, New York 10048.

The Company has filed with the Commission a Registration Statement on Form
S-3 (together with all amendments, schedules and exhibits thereto, the
"Registration Statement") under the Securities Act with respect to the Common
Stock offered hereby. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information with
respect to the Company and the Common Stock offered hereby, reference is made to
the Registration Statement. Statements made in the Prospectus as to the contents
of any contract, agreement or other document are not necessarily complete; with
respect to each such contract, agreement or other document filed as an exhibit
to, or incorporated by reference in, the Registration Statement, reference is
made to the exhibit for a more complete description of the matter involved, and
each such statement shall be deemed qualified in its entirety by reference to
the copy of the applicable documents filed with the Commission. The Registration
Statement and the exhibits thereto may be inspected, without charge, at the
offices of the Commission or copies thereof may be obtained at prescribed rates
from the Public Reference Section of the Commission at the address set forth
above. The Registration Statement and other information filed by the Company
with the Commission are also available at the web site maintained by the
Commission on the World Wide Web at http://www.sec.gov.

23
<PAGE> 24

================================================================================

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, IN CONNECTION WITH THIS OFFER AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDER OR THE
UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, THE SHARES BY ANYONE IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL OR TO ANY PERSON TO WHOM IT
IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.

---------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary................. 3
Cautionary Statement Regarding
Forward-Looking Information...... 5
Risk Factors....................... 5
Price Range of Common Stock........ 8
Selected Consolidated Financial
Data............................. 9
Management's Discussion and
Analysis of Financial Condition
and Results of Operations........ 10
Business........................... 15
Management......................... 17
Principal and Selling
Stockholders..................... 19
Underwriting....................... 21
Legal Matters...................... 22
Experts............................ 22
Information Incorporated by
Reference........................ 22
Available Information.............. 23
</TABLE>

================================================================================

950,000 SHARES

OPTEK TECHNOLOGY, INC.

COMMON STOCK

PROSPECTUS

ABN AMRO
CHICAGO CORPORATION

June 16, 1997

================================================================================