-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, C6yVtgEj3ml3lv2c3SUYbv0xuZkE0C7uU1KHzn5kr1TMRCBY6CW6/Gu1wbtiZRyY CND2a10CJBmmqQUd+4GEyA== 0000073864-95-000002.txt : 19950615 0000073864-95-000002.hdr.sgml : 19950615 ACCESSION NUMBER: 0000073864-95-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950131 FILED AS OF DATE: 19950317 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: OEA INC /DE/ CENTRAL INDEX KEY: 0000073864 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 322362379 STATE OF INCORPORATION: DE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06711 FILM NUMBER: 95521508 BUSINESS ADDRESS: STREET 1: 34501 E QUINCY AVE CITY: AURORA STATE: CO ZIP: 80015 BUSINESS PHONE: 3036931248 MAIL ADDRESS: STREET 1: P O BOX 100488 CITY: DENVER STATE: CO ZIP: 80250 10-Q 1 FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 1995 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 January 31, 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. 20,484,328 Shares of Common Stock at March 10, 1995. PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements Index to Financial Statements Page No. -------- Consolidated Condensed Balance Sheets January 31, 1995 (unaudited) and July 31, 1994............................... 2 Consolidated Condensed Statements of Earnings (unaudited) Three Months and Six Months Ended January 31, 1995 and 1994................. 3 Consolidated Condensed Statements of Cash Flows (unaudited) Six Months Ended January 31, 1995 and 1994................. 4 -1- OEA, INC. CONSOLIDATED CONDENSED BALANCE SHEETS
ASSETS January 31, 1995 July 31, 1994 (Unaudited) Current Assets: ------------- ------------- Cash and Cash Equivalents $ 5,408,101 $ 4,820,669 Accounts Receivable, Net 24,123,872 26,525,958 Unbilled Costs and Accrued Earnings 5,107,100 3,734,521 Inventories Raw Material and Component Parts 9,144,871 11,197,176 Work-in-Process 10,229,887 11,650,102 Finished Goods 4,227,450 3,582,111 --------- --------- 23,602,208 26,429,389 Prepaid Expenses and Other Current Assets 835,842 852,866 ------- ------- Total Current Assets 59,077,123 62,363,403 ---------- ---------- Cash Value of Life Insurance 325,564 325,564 Property, Plant and Equipment 101,183,047 91,671,057 Less: Accumulated Depreciation 27,319,981 25,027,396 ---------- ---------- Property, Plant and Equipment, Net 73,863,066 66,643,661 Long-Term Receivable 3,000,000 3,000,000 Investment in Foreign Joint Venture 2,620,381 2,547,415 Other Assets 426,636 434,861 ------- ------- Total Assets $ 139,312,770 $ 135,314,904 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts Payable $ 3,488,205 $ 4,220,447 Accrued Expenses 3,409,460 3,335,582 Deferred Income 206,168 206,168 Federal and State Income Taxes 1,210,224 1,120,481 --------- --------- Total Current Liabilities 8,314,057 8,882,678 Deferred Compensation Payable 852,413 822,035 Deferred Income Taxes 3,538,994 3,538,994 Deferred Income 216,735 216,735 ------- ------- Total Liabilities 12,922,199 13,460,442 Minority Interest in Consolidated Subsidiary 722,569 --- ------- ---------- 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 11,983,237 11,878,124 Retained Earnings 113,357,831 109,669,560 Less: Cost of Treasury Shares, 1,537,626 and 1,554,155 (1,875,036) (1,895,192) ---------- ---------- Total Stockholders' Equity 125,668,002 121,854,462 ----------- ----------- Total Liabilities and Stockholders' Equity $ 139,312,770 $ 135,314,904 ============= =============
-2- OEA, INC. CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (Unaudited)
Three Months Ended January 31, Six Months Ended January 31, 1995 1994 1995 1994 ---------- ---------- ---------- ----------- Net Sales .................................................. $ 31,896,677 $ 24,819,906 $ 59,912,563 $ 48,440,104 Cost of Sales .............................................. 21,410,604 16,922,442 39,349,164 33,347,631 ---------- ---------- ---------- ---------- Gross Profit ..................................... 10,486,073 7,897,464 20,563,399 15,092,473 General and Administrative Expenses ........................ 1,601,310 1,625,813 3,058,894 2,914,809 Research and Development Expenses .......................... 895,163 172,393 1,468,296 798,602 ------- ------- --------- ------- Operating Profit ................................. 7,989,600 6,099,258 16,036,209 11,379,062 Other Income (Expense): Interest Income ....................................... 96,903 98,131 191,376 185,806 Interest Expense ...................................... (8,001) (20,293) (21,710) (70,224) Other, Net ............................................ 53,586 (33,829) (360,364) (167,829) Expenses From Settlement of Environmental Matters (Note 1) -- -- (2,250,000) -- Minority Interest in Net Loss of Consolidated Subsidiary 87,375 -- 184,776 -- ------ ------- ------- -------- 229,863 44,009 (2,255,922) (52,247) ------- ------ ---------- ------- Earnings Before Income Taxes ..................... 8,219,463 6,143,267 13,780,287 11,326,815 Federal and State Income Tax Expense ....................... 3,164,678 2,357,517 6,433,720 4,355,700 --------- --------- --------- --------- Net Earnings ..................................... $ 5,054,785 $ 3,785,750 $ 7,346,567 $ 6,971,115 ============ ============ ============ ============ Earnings Per Share ............................... $ 0.25 $ 0.19 $ 0.36 $ 0.34 ============ ============ ============ =========== Weighted Average Number of Shares Outstanding .............. 20,482,045 20,437,675 20,475,105 20,426,122 ========== ========== ========== ==========
Note: (1) On December 13, 1994, the Company reached a final settlement in its environmental matters in the net amount of $2,250,000. Refer to Part II, Item 1 of this report for further information. -3- OEA, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended January 31, 1995 1994 ------------ ------------ Operating Activities: Net Earnings ......................................................... $ 7,346,567 $ 6,971,115 Adjustments to reconcile net earnings to net cash provided by operating activities: Undistributed earnings of foreign joint venture.............................. (172,966) (257) Minority interest in consolidated subsidiary.................................... 907,345 -- Foreign currency translation adjustment .............................. 253,343 -- Depreciation and amortization ........................................ 3,152,753 2,553,290 Increase in deferred compensation payable ............................ 30,378 30,378 Loss on disposal of property, plant and equipment.............................. 282,671 13,357 Changes in operating assets and liabilities: Accounts receivable ............................................. 2,402,086 7,245,278 Unbilled costs and accrued earnings ............................. (1,372,579) 1,394,817 Inventories ..................................................... 2,827,181 1,256,451 Prepaid expenses and other ...................................... 17,024 55,805 Accounts payable and accrued expenses.................................... (658,364) (3,285,238) Deferred income ................................................. -- (29,401) Income taxes payable ............................................ 89,743 (205,292) ------ -------- Net cash provided by operating activities............................. 15,105,182 16,000,303 ---------- ---------- Investing activities: Decrease (Increase) in marketable securities................................. -- (3,607) Capital expenditures ................................................. (10,699,778) (7,238,111) Proceeds from sale of property, plant, and equipment.......................... 44,949 -- Decrease in investment of foreign joint venture.............................. 100,000 (549,000) Decrease in other assets, net ........................................ 8,225 8,225 Net cash used in investing activities................................. (10,546,604) (7,782,493) ----------- ---------- Financing activities: Bank borrowings ...................................................... -- (2,900,000) Purchases of common stock for treasury ............................... -- (79,174) Proceeds from issuance of treasury stock ............................. 125,269 168,092 Decrease in deferred income .......................................... -- (103,084) Payment of dividends ................................................. (4,096,415) (3,065,855) ---------- ---------- Net cash provided by financing activities............................. (3,971,146) (5,980,021) ---------- ---------- Net increase in cash and cash equivalents.............................. 587,432 2,237,789 Cash and cash equivalents at beginning of period................................. 4,820,669 931,732 --------- ------- Cash and cash equivalents at end of period ................................ $ 5,408,101 $ 3,169,521 ============ ============
-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 Six Months Ended January 31, Ended January 31, 1995 and 1994 1995 and 1994 Increase (Decrease) Increase (Decrease) ------------------------------ ------------------------------ Net Sales ............................. $ 7,076,771 28.5% 11,472,459 23.7% Cost of Sales ......................... 4,488,162 26.5% 6,001,533 18.0% General and Administrative Expenses .............................. (24,503) (1.5%) 144,085 4.9% Research and Development Expenses .............................. 722,770 419.3% 669,694 83.9% Net Earnings .......................... 1,269,035 33.5% 375,452 5.4%
-5- NET SALES - --------- The 28.5% increase in sales for the three months ended January 31, 1995, and the 23.7% increase for the six months ended January 31, 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. Second quarter sales for the automotive segment increased 42.0% from $14,875,900 to $21,125,200 and first-half sales increased 46.5% from $27,667,800 to $40,533,400, as compared to prior-year periods. An increase in automotive segment sales of 30% is expected for fiscal year 1995. Sales for the nonautomotive segment increased by 8.3% for the second quarter and decreased by 6.7% for the first half due to the relocation of the Denver aerospace operations to Fairfield, California in September 1994. Nonautomotive sales for fiscal year 1995 are expected to be nominally higher than fiscal year 1994 sales. COST OF SALES - ------------- Cost of sales increased by 26.5% for the three months ended January 31, 1995, and 18.0% for the six months ended January 31, 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 January 31, 1994 and 1995 68.2% to 67.1% Six Months ended January 31, 1994 and 1995 68.8% to 65.7% GENERAL AND ADMINISTRATIVE EXPENSES - ----------------------------------- General and administrative expenses decreased by $24,500 for the three months ended January 31, 1995, and increased by $144,100 for the six months ended January 31, 1995, as compared to the prior-year periods. The increase for the first half was primarily due to expenses associated with the hybrid gas generator facility, which was not fully operational in the prior-year periods, and to start-up costs associated with the Pyroindustrie facility in France. The expenses, as a percentage of sales, were as follows: Three Months ended January 31, 1994 and 1995 6.6% to 5.0% Six Months ended January 31, 1994 and 1995 6.0% to 5.1% -6- RESEARCH AND DEVELOPMENT EXPENSES - --------------------------------- Research and development costs increased by $722,800 for the three months ended January 31, 1995, and $669,700 for the six months ended January 31, 1995, as compared to the prior-year periods. These costs are expected to increase significantly for the remainder of fiscal year 1995 due to continued development of passenger, driver and side-impact hybrid inflators. NET EARNINGS - ------------ Net earnings increased $1,269,000 for the three months ended January 31, 1995, and $375,500 for the six months ended January 31, 1995, as compared to prior-year periods. The increase during the second quarter resulted primarily from increased sales in the automotive segment. The increase in the first half was largely offset by the settlement of the Company's environmental matters in the amount of $2,250,000. Earnings are expected to increase in the second half consistent with fiscal year 1995 goals. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- The Company's working capital decreased slightly during the quarter to $50,763,100. During the six-month period ended January 31, 1995, the Company made capital expenditures totaling approximately $10,699,800 which were funded principally from operations. The Company maintains an $8,000,000 Revolving Credit Agreement with its principal bank and at January 31, 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 foreign 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 six-month periods ended January 31, 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 and the settlement of legal proceedings described in Part II, Item 1 which follows. Part II - OTHER INFORMATION Item 1. Legal Proceedings The Company has previously reported a civil action filed by the Colorado Department of Health (CDH) alleging improper handling of wastes at the Company's Denver facility. On December 12, 1994, the Company effected a complete settlement of that proceeding. Under the settlement, the Company paid $800,000 to CDH and agreed to pay $300,000 over a period of three years to various local government agencies and associations for use in environmental projects. In addition, if the Company commits specified violations of environmental laws or the settlement agreement within the next three years, it could become obligated to pay up to an additional $1,900,000. The Company believes that its current procedures are sufficient to avoid future violations and does not expect to become obligated to pay any portion of the additional $1,900,000. The Company also agreed with CDH that it would spend a total of $3,000,000 to evaluate and, if appropriate, implement various waste minimization, pollution prevention and worker safety projects. Of that amount, the Company has already spent approximately $2,450,000, with the balance to be expended over three years. The Company has also previously reported the settlement of a federal criminal investigation relating to essentially the same facts as the CDH proceeding. The sentencing hearing under that settlement agreement was held on December 13, 1994. The court ordered OEA to pay a fine in the net amount of $1,150,000 after taking into -8- account credits for amounts paid to CDH, plus minor administrative costs. The full amount was paid in December 1994. The settlement with CDH and the completion of the sentencing hearing constitute a complete resolution of the issues raised in both of those proceedings. Item 2. Changes in Securities None Item 3. Defaults on Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders At the Company's annual stockholders' meeting held on January 13, 1995, nine directors were elected and the proposed Employees' Stock Option Plan and the proposed Nonemployee Directors' Stock Option Plan (the "Plans") were adopted. The Plans provide for awards of stock options to be made in respect of a maximum of 600,000 shares of Common Stock under the Employees' Plan and 50,000 shares of Common Stock under the Nonemployee Directors' Plan, subject to adjustment for capital changes. Shares in respect to which grants are made may be either authorized but unissued shares of Common Stock or issued shares reacquired by and held in treasury, or both. Shares of Common Stock that are subject to options that expire, terminate or are annulled for any reason without having been exercised or are forfeited prior to becoming exercisable will return to the pool of such shares available for grant under the Plans. A detailed description of the Plans was included in and is incorporated by reference from the Registrant's definitive proxy statement for its 1995 annual shareholders meeting which was filed with the Securities and Exchange Commission on December 9, 1994. -9- Results of Shareholders' Voting at Annual Meeting
Votes Cast -------------------------------- No Proxy Total Shares Directors Elected: For Against Withheld Received Outstanding ------- ------- -------- -------- ------------ Ahmed D. Kafadar, Chairman 18,572,499 - 135,752 1,773,923 20,482,174 Charles B. Kafadar 18,572,499 - 135,752 1,773,923 20,482,174 John E. Banko 18,572,499 - 135,752 1,773,923 20,482,174 James R. Burnett 18,572,499 - 135,752 1,773,923 20,482,174 Lewis W. Watson 18,572,499 - 135,752 1,773,923 20,482,174 Philip E. Johnson 18,572,499 - 135,752 1,773,923 20,482,174 George S. Ansell 18,572,499 - 135,752 1,773,923 20,482,174 Howard P. Colhoun 18,572,499 - 135,752 1,773,923 20,482,174 Robert J. Schultz 18,572,499 - 135,752 1,773,923 20,482,174
No Proxy Total Shares For Against Abstain Received Outstanding ---------- --------- ------- -------- ------------- Employees' Stock 17,154,461 1,416,023 137,767 1,773,923 20,482,174 Option Plan Nonemployee Directors' Stock 17,453,310 962,109 292,832 1,773,923 20,482,174 Option Plan
Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (a) Exhibits None (b) Reports on Form 8-K None -10- 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) March 14, 1995 Date Paul J. Martin Vice President/Treasurer March 14, 1995 Date Charles B. Kafadar President -11- -----END PRIVACY-ENHANCED MESSAGE-----