FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended: January 31, 1997
Commission File Number: 0-16304
OPTEK TECHNOLOGY, INC.
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(Exact name of registrant as specified in its charter)
State of Delaware
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(State or other jurisdiction of incorporation or organization)
75-1962405
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(I.R.S. Employer Identification No.)
215 West Crosby Road Carrollton, Texas 75006
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(Address of principle executive offices) (Zip Code)
(972) 323-2200
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
X
------- -------
Yes No
Number of common shares outstanding as of January 31, 1997:
4,050,005 par value $.01 per share
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
---------------------
Optek Technology, Inc. Consolidated Balance Sheets as of January 31, 1997 and
October 25, 1996.
Optek Technology, Inc. Consolidated Statements of Income for the Three Months
Ended January 31, 1997 and January 26, 1996.
Optek Technology, Inc. Consolidated Statements of Cash Flows for the Three
Months Ended January 31, 1997 and January 26, 1996.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
PART II - OTHER INFORMATION
Item 5. Other Information.
------------------
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
<PAGE>
FORM 10-Q
PART I
OPTEK TECHNOLOGY, INC.
Consolidated Balance Sheets
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
January October
31,1997 25, 1996
---------- ---------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 563 $ 594
Accounts receivable, net of
allowance for doubtful
accounts and customer returns 6,091 7,288
of $1,282 in 1997
and $1,095 in 1996
Inventories (note 2) 6,548 6,007
Deferred income taxes 1,142 1,142
Prepaid expenses 69 82
------- --------
Total current assets 14,413 15,113
Property, plant and equipment, net 10,745 11,150
Other assets 89 96
-------- --------
$25,247 $26,359
======== ========
</TABLE>
(continued)
<PAGE>
FORM 10-Q
PART I
OPTEK TECHNOLOGY, INC.
Consolidated Balance Sheets
(Unaudited)
(in thousands except share and per share data)
<TABLE>
<CAPTION> January October
31, 1997 25, 1996
---------- ----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable $ 2,138 $ 2,331
Accrued expenses 5,294 5,345
Checks not presented for payment 875 779
-------- --------
Total current liabilities 8,307 8,455
Long-term debt 271 3,428
Other liabilities 89 100
Deferred income taxes 309 309
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 and outstanding 4,050,005
shares in 1997 and 3,912,915
shares in 1996 42 39
Additional paid-in-capital 13,662 13,373
Retained earnings 2,567 655
---------- ----------
Total stockholders' equity 16,271 14,067
---------- ----------
$25,247 $26,359
---------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
FORM 10-Q
PART I
OPTEK TECHNOLOGY, INC.
Consolidated Statements of Income
(Unaudited)
(in thousands except share and per share data)
<TABLE>
<CAPTION> THREE MONTHS ENDED
January January
31, 1997 26, 1996
---------- ----------
<S> <C> <C>
Net sales $16,689 $15,040
Costs and expenses:
Cost of sales 10,099 9,275
Product development expenses 318 195
Engineering expenses 1,009 948
Selling expenses 1,295 1,297
General and administrative expenses 866 826
-------- --------
Total costs and expenses 13,587 12,541
-------- -------
Operating income 3,102 2,499
Other expenses:
Interest expense 83 449
Other expense (income), net 76 (50)
-------- --------
Total other expenses 159 399
-------- --------
Earnings before income taxes 2,943 2,100
-------- ---------
Income tax expense 1,031 55
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Net earnings $ 1,912 $ 2,045
--------- ---------
Earnings per common and common
equivalent shares (note 4) $0.25 $0.28
---------- ----------
Weighted average common and common
equivalent shares 7,528,539 7,420,683
---------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
FORM 10-Q
PART I
OPTEK TECHNOLOGY, INC.
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
<TABLE>
<CAPTION> THREE MONTHS ENDED
January January
31, 1997 26, 1996
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,912 $ 2,045
Adjustments to reconcile net
earnings to net cash provided
by operating activities:
Depreciation and amortization 570 618
Changes in assets and
liabilities:
Accounts receivable 1,197 935
Inventories (541) (303)
Prepaid expenses and other
assets 20 44
Accounts payable, accrued
expenses and other
liabilities (255) (1,862)
--------- ----------
Net cash provided by
operating activities 2,903 1,477
Cash flows from investing activities:
Purchase of property, plant and (165) (307)
equipment
---------- ----------
Net cash used in (165) (307)
investing activities
Cash flows from financing activities:
Net repayment under long-term
bank debt (3,157) (1,675)
Net proceeds from exercise of
stock options and warrants 292 43
Other financing activities 96 152
---------- ----------
Net cash used in (2,769) (1,480)
financing activities
Net decrease in cash (31) (310)
Cash at beginning of period 594 928
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Cash at end of period $ 563 $ 618
---------- ----------
Interest payments $ 98 $ 480
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Income tax payments $ 93 $ -
========= ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
FORM 10-Q
PART I
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
January 31, 1997
NOTE 1
The condensed consolidated financial statements of Optek Technology, Inc. (the
"Company") are unaudited and reflect all adjustments, consisting only of normal
recurring adjustments, which are, in the opinion of management, necessary for a
fair presentation of the results for the interim periods. These condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended October 25, 1996. The results of
operations for the three months ended January 31, 1997 are not necessarily
indicative of the results for the entire year ending October 31, 1997.
NOTE 2
The components of inventories in thousands of dollars are as follows:
<TABLE>
<CAPTION>
January October
31, 1997 25, 1996
-------- --------
<S> <C> <C>
Finished goods $ 1,042 $ 1,109
Work-in-process 3,693 3,323
Raw materials 3,708 3,381
Reserves for surplus and obsolete inventory (1,895) (1,806)
-------- --------
$ 6,548 $ 6,007
======== ========
</TABLE>
NOTE 3
The registrant has no material pending legal proceedings.
NOTE 4
Earnings per common share and common equivalent shares is based on the weighted
average number of shares and, when dilutive, equivalent shares outstanding
during each of the periods presented. Primary earnings per share and fully
diluted earnings per share were substantially the same for the first quarters of
fiscal 1997 and fiscal 1996. The calculation of net earnings per share in 1997
and 1996 uses the modified treasury stock method.
NOTE 5
Other notes have been omitted pursuant to Rule 10-01 (a) (5) of Regulation S-X.
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
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Changes in Results of Operations
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Net sales for the first quarter of 1997 were $16.7 million, up 11% compared to
the prior year net sales of $15.0 million. The quarter-to-quarter increase was
the result of a general increase in overall product sales for both Commercial
and Hi-Rel (high reliability) products and an increase in Automotive magnetic
sensor components (Hall Effect) related to an automotive theft-deterrent system.
Commercial product sales of $11.7 million were up $.8 million, or 7%; Automotive
product sales of $3.5 million were up $.6 million, or 21%; and Hi-Rel (high
reliability) product sales of $1.4 million were up $.2 million, or 19%.
Cost of sales was $10.1 million, or 61% of sales, in the first quarter of 1997
versus $9.3 million, or 62% of sales, during the comparable period of 1996.
This resulted in gross margins of 39% in 1997 versus 38% in 1996. This
improvement was primarily the result of increased production volumes without a
corresponding increase in fixed costs.
Product development and engineering expenses during the first quarter of 1997
were $1.3 million, or 8% of sales, compared to $1.1 million, or 8% of sales, in
the previous year. The increase in dollars is related to the addition of
resources to develop and support new programs.
Selling, general and administrative expenses in the first quarter of 1997 were
$2.2 million or 13% of sales. This compares to $2.1 million, or 14% of sales,
during the same period of 1996.
Operating income for the quarter was $3.1 million, or 19% of sales, compared to
$2.5 million, or 17% of sales, in the first quarter of 1996. The improvement
from 1996 was primarily the result of the aforementioned increase in sales
volume and resulting improvement in gross margin.
Other expenses, consisting primarily of interest expense, were $.2 million in
the first quarter of 1997 compared to $.4 million in 1996. This decrease in
expenses was the result of the continued reduction in long term debt.
Income tax expense during the first quarter of 1997 was $1.0 million versus $.1
million during the same period of 1996. Tax expense increased due to the
Company having fully utilized remaining tax net operating loss carryforwards
during fiscal 1996. The Company expects to be on a fully taxed basis during
1997.
<PAGE>
As a result of the factors discussed above, net earnings for the first quarter
of 1997 were $1.9 million versus $2.0 million in the first quarter of 1996.
Liquidity and Capital Resources
- -------------------------------
As reflected in the Company's consolidated statements of cash flows, Optek
generated approximately $2.9 million in cash from operations in the first
quarter of fiscal year 1997. The largest single use of cash flow (approximately
$3.2 million) continued to be the reduction of the Company's outstanding debt.
The amount outstanding at the end of the quarter was $271,000. Management
believes that cash flows from operations will be adequate to retire its
outstanding balance of long term debt during fiscal 1997.
A credit agreement with a financial institution provides a $10.5 million working
capital line. Amounts drawn on the working capital line bear interest at 1/2%
over the prime rate announced from time to time by the First National Bank of
Chicago, Chicago, Illinois. This working capital line matures on October 31,
1997, with a one year extension if no default exists under the loan documents at
maturity. The Company is currently in compliance with the financial and other
covenants contained in its loan documents.
The Company anticipates a need for additional capital spending in 1997 to
support potential increases in demand during 1998 and 1999. The Company also
anticipates higher expenditures for federal income taxes in 1997 due to the
Company's full utilization of tax loss carryforwards during 1996. Although
Optek's ability to fund such capital expenditures and research and development
is constrained by the terms of the loan documents, management believes that its
working relationship with its lender is good and that the facility and cash
flows from operations after the debt is paid will be adequate to finance the
Company's needs for the foreseeable future.
<PAGE>
OPTEK TECHNOLOGY, INC.
PART II. - OTHER INFORMATION
ITEM 5. Other Information.
------------------
ITEM 6. Exhibits and Reports on Form 8-K.
---------------------------------
None
SIGNATURE
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on behalf of the undersigned
thereunto duly authorized.
Optek Technology, Inc.
Date: March 12, 1997 By: /s/ Thomas R. Filesi
- -------------------------- ------------------------
Thomas R. Filesi
President and CEO
(Principal Executive
Officer)
Date: March 12, 1997 By: /s/ William J. Collinsworth
- -------------------------- ---------------------------
William J. Collinsworth
Vice President - Finance
(Principal Financial
Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> JAN-31-1997
<CASH> 563
<SECURITIES> 0
<RECEIVABLES> 7373
<ALLOWANCES> 1282
<INVENTORY> 6548
<CURRENT-ASSETS> 14413
<PP&E> 26787
<DEPRECIATION> 16042
<TOTAL-ASSETS> 25247
<CURRENT-LIABILITIES> 8307
<BONDS> 0
0
0
<COMMON> 42
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 25247
<SALES> 16689
<TOTAL-REVENUES> 16689
<CGS> 10099
<TOTAL-COSTS> 13587
<OTHER-EXPENSES> 76
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 83
<INCOME-PRETAX> 2943
<INCOME-TAX> 1031
<INCOME-CONTINUING> 1912
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1912
<EPS-PRIMARY> .25
<EPS-DILUTED> .25
</TABLE>
