Segment Reporting

12 Months Ended

Oct. 02, 2022

Segment Reporting [Abstract]

Segment Reporting

Note 4 — Segment Reporting

The Company’s reportable segments are strategic businesses offering similar products to similar markets and customers; however, the companies are operated and managed separately due to differences in manufacturing technology, equipment, geographic location, and specific product mix. Applied Optics Center was acquired as a unit, and the management at the time of the acquisition was retained. Both the Applied Optics Center and Optex Systems – Richardson operate as reportable segments under the Optex Systems, Inc. corporate umbrella.

The Applied Optics Center segment also serves as the key supplier of laser coated filters used in the production of periscope assemblies for the Optex Systems-Richardson (“Optex Systems”) segment. Intersegment sales and transfers are accounted for at annually agreed to pricing rates based on estimated segment product cost, which includes segment direct manufacturing and general and administrative costs, but exclude profits that would apply to third party external customers.

Optex Systems (OPX) – Richardson, Texas

Optex Systems revenues are primarily in support of prime and subcontracted military customers. Approximately 84% of the Optex Systems segment revenue is comprised of domestic military customers, and 16% is comprised of foreign military customers. Optex Systems segment revenue is derived from the U.S. government, 13%, and two major U.S. defense contractors representing 17% and 8%, of the Company’s consolidated revenue, respectively.

Optex Systems is located in Richardson Texas, with leased premises consisting of approximately 49,100 square feet. As of October 2, 2022, the Richardson facility operated with 46 full time equivalent employees in a single shift operation. Optex Systems, Richardson serves as the home office for both the Optex Systems and Applied Optics Center segments.

Applied Optics Center (AOC) – Dallas, Texas

The Applied Optics Center serves primarily domestic U.S. customers. Sales to commercial customers represent 41% and military sales to prime and subcontracted customers represent 59% of the total segment revenue. Approximately 94% of the AOC revenue is derived from external customers and approximately 6% is related to intersegment sales to Optex Systems in support of military contracts. For the twelve months ended October 2, 2022, the AOC segment revenue from one major commercial customer, and two major defense contractors represent approximately 22%, 15% and 5% of the Company’s consolidated revenue, respectively.

The Applied Optics Center is located in Dallas, Texas with leased premises consisting of approximately 44,867 square feet of space. As of October 2, 2022, AOC operated with 38 full time equivalent employees in a single shift operation.

The financial table below presents the information for each of the reportable segments profit or loss as well as segment assets for each year. The Company does not allocate interest expense, income taxes or unusual items to segments.

	Reportable Segment Financial Information (thousands)
	Twelve months ended October 2, 2022
	Optex Systems Richardson			Applied Optics Center Dallas		Other (non- allocated costs and intersegment eliminations)			Consolidated Total
Revenues from external customers	$	9,533		$	12,850	$	-		$	22,383
Intersegment revenues		-			879		(879	)		-
Total Revenue	$	9,533		$	13,729	$	(879	)	$	22,383
Interest expense	$	-		$	-	$	-		$	-
Depreciation and Amortization	$	38		$	269	$	-		$	307
Income (loss) before taxes	$	(380	)	$	2,189	$	(162	)	$	1,647
Other significant noncash items:
Allocated home office expense	$	(1,141	)	$	1,141	$	-		$	-
Stock compensation expense	$	-		$	-	$	162		$	162
Warranty expense	$	-		$	95	$	-		$	95
Segment Assets	$	11,286		$	7,251	$	-		$	18,537
Expenditures for segment assets	$	64		$	193	$	-		$	257

	Reportable Segment Financial Information (thousands)
	Twelve months ended October 3, 2021
	Optex Systems Richardson			Applied Optics Center Dallas			Other (non- allocated costs and intersegment eliminations)			Consolidated Total
Revenues from external customers	$	11,827		$	6,395		$	-		$	18,222
Intersegment revenues		-			1,056			(1,056	)		-
Total Revenue	$	11,827		$	7,451		$	(1,056	)	$	18,222
Interest expense	$	-		$	-		$	11		$	11
Depreciation and Amortization	$	41		$	222		$	-		$	263
Income before taxes	$	251		$	(517	)	$	2,296		$	2,030
Other significant noncash items:
Allocated home office expense	$	(677	)	$	677		$	-		$	-
Gain on change in fair value of warrants	$	-		$	-		$	(2,535	)	$	(2,535	)
Stock compensation expense	$	-		$	-		$	228		$	228
Warranty Expense	$	(15	)	$	90		$	-		$	75
Segment Assets	$	14,010		$	6,845		$	-		$	20,855
Expenditures for segment assets	$	20		$	254		$	-		$	274