FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] Quarterly Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the Quarterly period ended April 30, 1995
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Act of 1934
For the transition period from to
Commission file number 1-6711
OEA,INC.
(Exact name of registrant as specified in its charter)
Delaware 36-2362379
(State or other jurisdiction of (I.R.S.Employer Identification
incorporation or organization) Number)
P. O. Box 100488, Denver, Colorado 80250
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 693-1248
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
20,486,378 Shares of Common Stock at June 1, 1995.
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Index to Financial Statements Page No.
--------
Consolidated Condensed Balance Sheets
April 30, 1995 (unaudited)
and July 31, 1994............................... 2
Consolidated Condensed Statements
of Earnings (unaudited)
Three Months and Nine Months
Ended April 30, 1995 and 1994................... 3
Consolidated Condensed Statements
of Cash Flows (unaudited) Nine Months
Ended April 30, 1995 and 1994................... 4
-1-
OEA, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
ASSETS
April 30, 1995 July 31, 1994
(Unaudited)
Current Assets: -------------- -------------
Cash and Cash Equivalents $ 14,361,939 $ 4,820,669
Accounts Receivable, Net 21,304,988 26,525,958
Unbilled Costs and Accrued Earnings 4,437,400 3,734,521
Inventories
Raw Material and Component Parts 7,442,959 11,197,176
Work-in-Process 11,856,348 11,650,102
Finished Goods 3,364,630 3,582,111
--------- ---------
22,663,937 26,429,389
Prepaid Expenses and Other Current Assets 563,575 852,866
------- -------
Total Current Assets 63,331,839 62,363,403
---------- ----------
Cash Value of Life Insurance 325,564 325,564
------- -------
Property, Plant and Equipment 105,827,706 91,671,057
Less: Accumulated Depreciation 29,302,542 25,027,396
---------- ----------
Property, Plant and Equipment, Net 76,525,164 66,643,661
Long-Term Receivable 3,000,000 3,000,000
Investment in Foreign Joint Venture 2,628,684 2,547,415
Other Assets 396,461 434,861
------- -------
Total Assets $ 146,207,712 $ 135,314,904
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 3,276,621 $ 4,220,447
Accrued Expenses 3,995,432 3,335,582
Deferred Income 206,168 206,168
Federal and State Income Taxes 939,359 1,120,481
------- ---------
Total Current Liabilities 8,417,580 8,882,678
Deferred Compensation Payable 913,763 822,035
Deferred Income Taxes 3,538,994 3,538,994
Deferred Income 216,735 216,735
------- -------
Total Liabilities 13,087,072 13,460,442
Minority Interest in Consolidated Subsidiary 446,899 ---
------- ----------
Stockholders' Equity:
Common Stock - $.10 par value, Authorized 50,000,000 shares:
Issued - 22,019,700 shares 2,201,970 2,201,970
Additional Paid-In Capital 11,989,021 11,878,124
Retained Earnings 120,354,915 109,669,560
Less: Cost of Treasury Shares, 1,535,272 and 1,554,155 (1,872,165) (1,895,192)
---------- ----------
Total Stockholders' Equity 132,673,741 121,854,462
----------- -----------
Total Liabilities and Stockholders' Equity $ 146,207,712 $ 135,314,904
============= =============
-2-
OEA, INC.
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (Unaudited)
Three Months Ended April 30, Nine Months Ended April 30,
1995 1994 1995 1994
------------ ------------- ------------- ------------
Net Sales $ 33,979,628 $ 29,586,174 $ 93,892,191 $ 78,026,278
Cost of Sales 21,431,832 18,830,533 60,780,996 52,178,164
---------- ---------- ---------- ----------
Gross Profit 12,547,796 10,755,641 33,111,195 25,848,114
General and Administrative Expenses 1,534,895 1,697,430 4,593,789 4,612,239
Research and Development Expenses 819,689 405,446 2,287,985 1,204,048
------- ------- --------- ---------
Operating Profit 10,193,212 8,652,765 26,229,421 20,031,827
Other Income (Expense):
Interest Income 105,876 129,034 297,252 314,840
Interest Expense (2,407) (28,660) (24,117) (98,884)
Other, Net (121,687) (384,488) (482,051) (552,317)
Expenses From Settlement of Environmental Matters (Note 1) --- --- (2,250,000) ---
Minority Interest in Net Loss of Consolidated Subsidiary 206,512 --- 391,288 ---
------- --------- ------- ---------
188,294 (284,114) (2,067,628) (336,361)
-------- --------- ----------- ---------
Earnings Before Income Taxes 10,381,506 8,368,651 24,161,793 19,695,466
Federal and State Income Tax Expense 4,270,109 3,197,764 10,703,829 7,553,464
--------- --------- ---------- ---------
Net Earnings $ 6,111,397 $ 5,170,887 $ 13,457,964 $ 12,142,002
============ ============= ============= ============
Earnings Per Share $ 0.30 $ 0.25 $ 0.66 $ 0.59
============ ============= ============= ============
Weighted Average Number of Shares Outstanding 20,483,974 20,442,653 20,477,996 20,431,511
========== ========== ========== ==========
Note: (1) On December 13, 1994, the Company reached a final settlement in its
environmental matters in the net amount of $2,250,000.
-3-
OEA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended April 30,
1995 1994
------------- ------------
Operating Activities:
Net Earnings $ 13,457,964 $ 12,142,002
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Undistributed earnings of foreign joint venture (181,269) (5,382)
Minority interest in consolidated subsidiary 838,187 ---
Foreign currency translation adjustment 932,514 ---
Depreciation and amortization 5,193,784 4,037,352
Increase in deferred compensation payable 91,728 45,567
Loss on disposal of property, plant and equipment 327,540 370,033
Changes in operating assets and liabilities:
Accounts receivable 5,220,972 4,913,987
Unbilled costs and accrued earnings (702,879) 1,990,099
Inventories 3,765,453 1,243,391
Prepaid expenses and other 289,291 84,130
Accounts payable and accrued expenses (283,976) (3,268,968)
Deferred income --- (44,101)
Income taxes payable (181,122) (133,343)
-------- --------
Net cash provided by operating activities 28,768,187 21,374,767
---------- ----------
Investing activities:
Decrease in marketable securities --- 352,602
Capital expenditures (15,467,774) (10,690,441)
Proceeds from sale of property, plant, and equipment 64,949 ---
Decrease (Increase) in investment of foreign joint venture 100,000 (1,328,124)
Decrease in other assets, net 38,400 12,339
------ ------
Net cash used in investing activities (15,264,425) (11,653,624)
----------- -----------
Financing activities:
Bank borrowings --- (2,900,000)
Purchases of common stock for treasury --- (237,309)
Proceeds from issuance of treasury stock 133,923 331,107
Decrease in deferred income --- (154,626)
Payment of dividends (4,096,415) (3,065,855)
---------- ----------
Net cash provided by financing activities (3,962,492) (6,026,683)
---------- ----------
Net increase in cash and cash equivalents 9,541,270 3,694,460
Cash and cash equivalents at beginning of period 4,820,669 931,732
--------- -------
Cash and cash equivalents at end of period $ 14,361,939 $ 4,626,192
============= =============
-4-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
A summary of the period to period changes in the principal items included in the
consolidated statements of earnings is shown below:
Comparisons of
----------------------------------------------------------------------------
Three Months Nine Months
Ended April 30, Ended April 30,
1995 and 1994 1995 and 1994
Increase (Decrease) Increase (Decrease)
----------------------------- --------------------------------
Net Sales .............................. $ 4,393,454 14.8% 15,865,913 20.3%
Cost of Sales .......................... 2,601,299 13.8% 8,602,832 16.5%
General and
Administrative
Expenses ............................... (162,535) (9.6%) (18,450) (0.4%)
Research and
Development
Expenses ............................... 414,243 102.2% 1,083,937 90.0%
Net Earnings ........................... 940,510 18.2% 1,315,962 10.8%
-5-
NET SALES
The 14.8% increase in sales for the three months ended April 30, 1995, and
the 20.3% increase for the nine months ended April 30, 1995, as compared
to prior-year periods, were the result of increased sales in the
automotive segment which were partially offset by decreased sales in the
nonautomotive segment. Sales for the automotive segment continued to
increase due to increased demand for air bags for both domestic and
foreign automobile manufacturers. Third quarter sales for the automotive
segment increased 28.2% from $19,485,900 to $24,989,300 and nine-month
sales increased 39.0% from $47,153,600 to $65,522,700, as compared to
prior-year periods. Sales for the nonautomotive segment decreased by 11.0%
and 8.1% for the third quarter and the nine months, respectively,
partially due to the relocation of the Denver aerospace operations to
Fairfield, California in September 1994.
COST OF SALES
Cost of sales increased by 13.8% for the three months ended April 30,
1995, and 16.5% for the nine months ended April 30, 1995, as compared to
the prior-year periods. These increases were primarily attributed to the
increased sales of the automotive segment. Costs were further impacted by
start-up costs associated with Pyroindustrie, OEA's new automotive
subsidiary in France, which began deliveries of air bag initiators in
February 1995. The cost of sales, as a percentage of sales, were as
follows:
Three Months ended April 30, 1994 and 1995 63.6% to 63.1%
Nine Months ended April 30, 1994 and 1995 66.9% to 64.7%
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses decreased by $162,500 for the three
months ended April 30, 1995, and $18,500 for the nine months ended April
30, 1995, as compared to the prior-year periods. These decreases were
obtained even though the Company incurred additional start-up costs
associated with the Pyroindustrie facility in France. The ratio of general
and administrative expenses to net sales decreased as follows:
Three Months ended April 30, 1994 and 1995 5.7% to 4.5%
Nine Months ended April 30, 1994 and 1995 5.9% to 4.9%
-6-
RESEARCH AND DEVELOPMENT EXPENSES
Research and development costs increased by $414,200 for the three months
ended April 30, 1995, and $1,083,900 for the nine months ended April 30,
1995, as compared to the prior-year periods. These costs are expected to
increase for the remainder of fiscal year 1995 due to continued
development of passenger, driver and side-impact hybrid inflators.
NET EARNINGS
Net earnings increased $940,500 for the three months ended April 30, 1995,
and $1,316,000 for the nine months ended April 30, 1995, as compared to
prior-year periods. The increase during the third quarter resulted
primarily from increased sales in the automotive segment. The increase for
the nine months was largely reduced by the settlement of the Company's
environmental matters in the amount of $2,250,000.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital increased during the quarter to $54,914,300.
During the nine-month period ended April 30, 1995, the Company made
capital expenditures totaling approximately $15,467,800 which were funded
principally from operations. The Company maintains an $8,000,000 Revolving
Credit Agreement with its principal bank and at April 30, 1995, had no
outstanding balance against this line of credit. Anticipated working
capital requirements, capital expenditures, and facility expansions are
expected to be met through internally generated funds and, when necessary,
borrowings from the agreement mentioned above, which can be increased when
required.
FOREIGN CURRENCY TRANSLATION
Assets and liabilities of the Company's foreign subsidiary are translated
to U.S. dollars at period-end exchange rates. Income and expense items are
translated at average exchange rates prevailing during the period. The
local currency is used as the functional currency for the subsidiary. A
translation adjustment results from translating the foriegn subsidiary's
accounts from functional currencies to U.S. dollars. Exchange gains
(losses) resulting from foreign currency transactions are included in the
consolidated statements of operations.
-7-
The unaudited financial statements furnished above reflect all adjustments
(consisting primarily of normal recurring accruals) which are, in the opinion of
OEA's management, necessary for a fair statement of the results for the
three-month and the nine-month periods ended April 30, 1995.
Refer to the Company's annual financial statements for the year ended July 31,
1994, for a description of the accounting policies, which have been continued
without change. Additionally, a foreign currency translation policy has been
adopted for fiscal year 1995, as described above. Also, refer to the footnotes
with those financial statements for additional details of the Company's
financial condition, results of operations, and changes in financial position.
The details in those notes have not changed except as a result of normal
transactions in the interim.
-8-
Part II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults on Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
-9-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OEA, INC.
(Registrant)
June 12, 1995
Date Paul J. Martin
Vice President/Treasurer
June 12, 1995
Date Charles B. Kafadar
President
-10-