-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CNE0jM1jwGT4Znx6hruXW78W1Yw4KVbDuMeCNFZK7KJr/QiW+uydB7sx1LP0mVFe atxWv7ScXHOMnljABcIB2g== 0000927356-00-000425.txt : 20000316 0000927356-00-000425.hdr.sgml : 20000316 ACCESSION NUMBER: 0000927356-00-000425 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000130 FILED AS OF DATE: 20000315 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OEA INC /DE/ CENTRAL INDEX KEY: 0000073864 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 362362379 STATE OF INCORPORATION: DE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-06711 FILM NUMBER: 570292 BUSINESS ADDRESS: STREET 1: 34501 E QUINCY AVE CITY: DENVER STATE: CO ZIP: 80250 BUSINESS PHONE: 3036931248 MAIL ADDRESS: STREET 1: P O BOX 100488 CITY: DENVER STATE: CO ZIP: 80250 10-Q 1 OEA, INC. - FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the Quarterly period ended January 30, 2000 ---------------- 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 incorporation or organization) Identification 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. 20,620,899 Shares of Common Stock at March 8, 2000. INDEX
Page No. -------- PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements Consolidated Condensed Balance Sheets January 30, 2000 (unaudited) and July 31, 1999............................................... 3 Consolidated Condensed Statements of Operations (unaudited) Three Months and Six Months Ended January 30, 2000 and January 29, 1999............................................... 4 Consolidated Condensed Statements of Cash Flows (unaudited) Six Months Ended January 30, 2000 and January 29, 1999............................................... 5 Notes to Consolidated Condensed Financial Statements (unaudited) 6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations....................................... 8 ITEM 3. Quantitative and Qualitative Disclosures about Market Risk...... 13 PART II - OTHER INFORMATION ITEM 1. Legal Proceedings............................................... 14 ITEM 2. Changes in Securities and Use of Proceeds....................... 14 ITEM 3. Defaults on Senior Securities................................... 14 ITEM 4. Submission of Matters to a Vote of Security Holders............. 14 ITEM 5. Other Information............................................... 15 ITEM 6. Exhibits and Reports on Form 8-K................................ 15
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OEA, INC. --------- CONSOLIDATED CONDENSED BALANCE SHEETS ------------------------------------- (in thousands) ASSETS January 30, 2000 July 31, 1999 -------------------------- ------------------------ (Unaudited) Current Assets: Cash and Cash Equivalents $ 19,409 $ 2,445 Accounts Receivable, Net 37,694 35,236 Unbilled Costs and Accrued Earnings 5,022 6,302 Income Taxes Receivable 3,115 3,858 Inventories: Raw Material and Component Parts 21,809 24,056 Work-in-Process 14,037 12,139 Finished Goods 9,404 7,399 ---------------------- -------------------- Total Inventory 45,250 43,594 Prepaid Expenses and Other 5,782 4,440 Total Current Assets 116,272 95,875 Property, Plant and Equipment 294,423 287,624 Less: Accumulated Depreciation 104,448 90,907 ---------------------- -------------------- Property, Plant and Equipment, Net 189,975 196,717 Long-term Receivable 1,000 2,000 Investment in Foreign Joint Venture 2,323 2,323 Other Assets 1,484 1,443 Total Assets $ 311,054 $ 298,358 ====================== ==================== LIABILITIES AND STOCKHOLDERS EQUITY Current Liabilities: Short-term Bank Borrowings $ 115,000 $ 0 Accounts Payable 25,242 25,665 Interest Payable 820 2,137 Accrued Expenses 6,772 6,390 ---------------------- -------------------- Total Current Liabilities 147,834 34,192 Long-term Bank Borrowings 0 91,000 Deferred Income Taxes 16,009 16,009 Other 439 583 ---------------------- -------------------- Total Liabilities 164,282 141,784 Stockholders' Equity: Common Stock - $.10 par value, Authorized 50,000,000 Shares: Issued - 22,019,700 Shares 2,202 2,202 Additional Paid-In Capital 13,450 13,376 Retained Earnings 139,208 146,333 Less: Cost of Treasury Shares, 1,399,911 and 1,408,379 (2,104) (2,117) Equity Adjustment from Translation (5,982) (3,220) Total Stockholders' Equity 146,773 156,574 Total Liabilities and Stockholders' Equity $ 311,054 $ 298,358 ====================== ====================
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OEA, INC. --------- CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS (Unaudited) ---------------------------------------------------------- (in thousands, except share data) Three Months Ended Six Months Ended January 30, 2000 January 29, 1999 January 30, 2000 January 29, 1999 ----------------- ----------------- ----------------- ----------------- Net Sales $ 59,568 $ 59,434 $ 119,542 $ 116,227 Cost of Sales 59,420 56,563 116,998 111,847 ------------- ------------- ------------- ------------- Gross Profit 148 2,871 2,544 4,380 Selling, General and Administrative Expenses 4,516 3,113 8,804 5,837 Research and Development Expenses 1,452 735 2,904 1,741 ------------- ------------- ------------- ------------- Operating Profit (Loss) (5,820) (977) (9,164) (3,198) Other Income (Expense): Interest Income 265 104 317 138 Interest Expense (2,245) (2,082) (4,126) (3,998) Royalty Income & Other, Net 853 1,531 1,648 1,643 ------------- ------------- ------------- ------------- (1,126) (447) (2,161) (2,217) ------------- ------------- ------------- ------------- Earnings (Loss) Before Income Tax Benefit (6,947) (1,424) (11,325) (5,415) Federal and State Income Tax Benefit (2,576) (423) (4,200) (1,697) ------------- ------------- ------------- ------------- Net Earnings (Loss) $ (4,371) $ (1,001) $ (7,125) $ (3,718) ============= ============= ============= ============= Earnings (Loss) Per Share - Basic & Diluted $ (0.21) $ (0.05) $ (0.35) $ (0.18) ============= ============= ============= ============= Weighted Average Number of Shares Outstanding : Basic 20,617,273 20,599,574 20,614,702 20,597,779 ============= ============= ============= ============= Weighted Average Number of Shares Outstanding : Diluted 20,617,273 20,599,574 20,614,702 20,597,779 ============= ============= ============= =============
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OEA, INC. --------- CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (Unaudited) ---------------------------------------------------------- (in thousands) Six Months Ended January 30, 2000 January 29, 1999 ---------------------- -------------------- Operating Activities Net Loss $ (7,125) $ (3,718) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and Amortization 14,238 11,692 Decrease in deferred compensation payable (1) (13) Gain on disposal of property, plant, and equipment --- (5) Changes in operating assets and liabilities: Accounts receivable (1,709) 165 Unbilled costs and accrued earnings 1,280 379 Inventories (1,849) 6,315 Prepaid expenses and other (1,552) 692 Accounts payable and accrued expenses (910) (1,941) Income taxes payable 692 3,006 ---------------------- -------------------- Net cash provided by operating activities 3,064 16,572 Investing Activities: Capital expenditures (9,989) (11,006) Proceeds from sale of property, plant, and equipment 9 8 Decrease in cash value of life insurance 20 (82) Increase in other assets, net (172) --- ---------------------- -------------------- Net cash used in investing activities (10,132) (11,080) Financing Activities: Proceeds from issuance of treasury stock 54 22 Capital contributions 32 33 Payment of Dividends --- (1,699) Increase in borrowings, net 24,000 (3,000) ---------------------- -------------------- Net cash provided by (used in) financing activities 24,087 (4,644) Effect of exchange rate changes on cash (54) 208 ---------------------- -------------------- Net increase in cash and cash equivalents 17,019 1,056 Cash and cash equivalents at beginning of period 2,445 1,920 ---------------------- -------------------- Cash and cash equivalents at end of period $ 19,409 $ 2,976 ====================== ====================
5 Notes to Consolidated Condensed Financial Statements (Unaudited) Note 1 - Basis of Presentation The unaudited financial statements furnished above reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of OEA's management, necessary for a fair statement of the results of operations for the three-month period ended January 30, 2000. Refer to the Company's annual financial statements for the year ended July 31, 1999, for a description of the Company's accounting policies, which have been continued without change. 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 at that time. Note 2- Comprehensive Income During the first quarter of fiscal 1999, the Company adopted Statement of Financial Accounting Standard No. 130, Reporting Comprehensive Income. Comprehensive income generally represents all changes in stockholders' equity, except those resulting from investments or contributions by stockholders. Total comprehensive income (loss) for the first six months of fiscal 2000 and fiscal 1999 were:
(in thousands) FY 2000 FY 1999 --------- --------- Net Loss $(7,125) $(3,718) Equity Adjustment from Translation (2,762) 916 --------- --------- Total Comprehensive Loss $(9,887) $(2,802) ========= ========= Note 3 - Segment Information
In June 1997, the FASB issued Statement of Financial Accounting Standard No. 131, Disclosures about Segments of an Enterprise and Related Information. The Statement requires public companies to report certain information about operating segments in complete sets of financial statements and in condensed financial statements of interim periods issued to shareholders. Under Statement No. 131, operating segments are to be determined based on how management measures performance and makes decisions about allocating resources. It also requires that public companies report certain information about their products and services, the geographic areas in which they operate, and their major customers. Statement No. 131 is effective for fiscal years beginning after December 15, 1997. The Company adopted Statement No. 131 in the fourth quarter of fiscal 1999.
Six Months Ended (in thousands) January 30, 2000 January 29, 1999 ----------------------- ---------------------- Sales to Unaffiliated Customers ------------------------------- Automotive $ 103,913 $ 94,874 Aerospace 15,628 21,353 ---------------------- --------------------- TOTAL $ 119,542 $ 116,227 ====================== ===================== Operating Profit (Loss) ----------------------- Automotive $ (7,167) $ (4,860) Aerospace (1,997) 1,662 ---------------------- --------------------- TOTAL $ (9,164) $ (3,198) ====================== =====================
6 Note 4 - Bank Borrowings On April 10, 1998, the Company entered into a $180 million Amended and Restated Revolving Credit Agreement with a group of seven banks. This agreement was amended on June 11, 1998, December 10, 1998, and December 9, 1999. The credit facility was reduced to $115 million and is secured by substantially all of the Company's assets. At the Company's request, this agreement was again amended on February 17, 2000 to waive compliance with the tangible net worth, debt to EBITDA, and minimum interest coverage covenants for the second quarter of fiscal 2000. The Company's principal bank is acting as agent for the banks under this agreement. At January 30, 2000, the Company had $115.0 million of debt outstanding on this credit facility. The Company's debt, net of cash, was $95.6 million at January 30, 2000. All outstanding debt at January 30, 2000 is classified as short-term as the credit facility expires on December 18, 2000. Please refer to Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources for further information regarding this credit facility. 7 ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OEA, Inc., together with its subsidiaries, is referred to herein as "OEA" or the "Company." This report contains certain forward-looking statements within the meaning of Section 27E of the Securities Exchange Act of 1934, as amended, including statements regarding Company strategy, its soundness, the inflator and initiator market, inflator prices, inflator and initiator demand, sales volume increases, the utilization rate of the Company's inflator manufacturing facility, the timing and benefits of cost reduction programs and improved manufacturing processes, aerospace sales following the development phase of new programs, as well as other statements or implications regarding future events. Actual results or events may differ materially from these forward-looking statements depending on a variety of factors. Reference is made to the cautionary statements under the caption "Disclosure Regarding Forward-Looking Statements" in OEA's Annual Report on Form 10-K for the year ended July 31, 1999 and Form 8-K filed on June 4, 1998 for a description of various factors that might cause OEA's actual results to differ materially from those contemplated by such forward-looking statements. A summary of the principal items included in the consolidated statements of earnings, on a percent of sales basis, is shown below:
Comparison of ------------- Three Months Ended ------------------ January 30, 2000 January 29, 1999 ---------------- ---------------- Dollars Dollars (in thousands) % of Sales (in thousands) % of Sales --------------------- ----------------- --------------------- ----------------- Net Sales $59,568 100.0% $59,434 100.0% Cost of Sales 59,420 99.8% 56,563 95.2% --------------------- ----------------- --------------------- ----------------- Gross Margin 148 0.2% 2,871 4.8% Selling, General and 4,516 7.6% 3,113 5.2% Administrative Expenses Research and 1,452 2.4% 735 1.2% Development Expenses --------------------- ----------------- --------------------- ----------------- Operating Profit (Loss) (5,820) (9.8%) (977) (1.6%) Other Expense, Net (1,126) (1.9%) (447) (0.8%) --------------------- ----------------- --------------------- ----------------- Earnings (Loss) Before Tax (6,947) (11.7%) (1,424) (2.4%) Income Tax Benefit (2,576) (4.3%) (423) (0.7%) --------------------- ----------------- --------------------- ----------------- Net Earnings (Loss) $(4,371) (7.3%) $(1,001) (1.7%) ===================== ================= ===================== =================
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Comparison of ------------- Six Months Ended ---------------- January 30, 2000 January 29, 1999 ---------------- ---------------- Dollars Dollars (in thousands) % of Sales (in thousands) % of Sales --------------------- ----------------- --------------------- ----------------- Net Sales $119,542 100.0% $116,227 100.0% Cost of Sales 116,998 97.9% 111,847 96.2% --------------------- ----------------- --------------------- ----------------- Gross Margin 2,544 2.1% 4,380 3.8% Selling, General and 8,804 7.4% 5,837 5.0% Administrative Expenses Research and 2,904 2.4% 1,741 1.5% Development Expenses --------------------- ----------------- --------------------- ----------------- Operating Profit (Loss) (9,164) (7.7%) (3,198) (2.8%) Other Expense, Net (2,161) (1.8%) (2,217) (1.9%) --------------------- ----------------- --------------------- ----------------- Earnings (Loss) Before Tax (11,325) (9.5%) (5,415) (4.7%) Income Tax Benefit (4,200) (3.5%) (1,697) (1.5%) --------------------- ----------------- --------------------- ----------------- Net Earnings (Loss) $ (7,125) (6.0%) $ (3,718) (3.2%) ===================== ================= ===================== =================
RECENT DEVELOPMENTS - ------------------- The Company's Board of Directors announced on March 13, 2000 that it had entered into an Agreement and Plan of Merger with Autoliv, Inc. which contemplates a tender offer by Autoliv for all outstanding shares of our common stock for a purchase price of $10.00 per share in cash. Autoliv is the worldwide leader in automotive safety systems. The tender offer contains a minimum condition of acceptance by a majority of the common stock outstanding, along with customary conditions, and the agreement contemplates a second step merger in which untendered shares would be converted into the right to receive $10.00 per share in cash. It is expected that Autoliv will commence the tender offer shortly. NET SALES - --------- Net sales were $59.6 million for the quarter ended January 30, 2000, as compared to prior-year second quarter net sales of $59.4 million. Net sales for the six months ended January 30, 2000 increased $3.3 million (2.9%) to $119.5 million as compared to the prior-year period. Automotive segment sales increased $4.4 million (9.1%) to $52.8 million in the second quarter and $9.0 million (9.5%) to $103.9 million for the first half of fiscal 2000, as compared to prior-year periods, driven by increased inflator demand. Inflator unit shipments increased by 37.0% and 38.7% in the second quarter and first half of fiscal 2000, respectively, as compared to the same periods of the prior year. This was driven by significantly increased demand for our side-impact, driver and second-generation passenger inflators, partially offset by a reduction in our first generation passenger inflator sales to Asian customers. The reduction was due to the current economic conditions in Asia and is expected to partially rebound in subsequent quarters. The dollar value of inflator sales increased $6.9 million (20.0%) in the second quarter and $13.7 million (20.4%) in the first half of fiscal 2000, as compared to the prior year periods, reflecting higher unit 9 sales partially offset by a shift in product mix towards lower priced side- impact inflators. Initiator unit sales decreased 13.2% and 12.1% in the second quarter and first half of fiscal 2000 respectively, as compared to the prior year periods. The unit volume decrease, coupled with a shift in product mix, resulted in decreased initiator net sales of $2.5 million (17.4%) in the second quarter and $4.7 million (16.8%) in the first half of fiscal 2000, as compared to the prior-year periods. Management believes the decrease in initiator sales resulted from inventory balancing by major customers. Aerospace segment sales were $6.7 million in the second quarter of fiscal 2000, a decline of $4.3 million (38.9%) from the prior year period. The decline in revenue resulted primarily from reduced sales to Boeing, our largest aerospace customer. Sixty percent of the decline in sales to Boeing resulted from the Delta launcher program which had one of its major customers file for bankruptcy protection, and a slow down due to the transition from the Boeing Delta II/III launch vehicle to the Delta IV launch vehicle. Sales declines to Boeing on the K-36D ejection seat, Atlas Igniter, GBI, F-18, and SLAM ER programs comprised the majority of the remaining sales decline. COST OF SALES - ------------- Cost of sales for the quarter ended January 30, 2000 was $59.4 million as compared to $56.6 million for the comparable prior-year period. Cost of sales for the six months ended January 30, 2000 was $117.0 as compared to $111.8 million for the comparable period last year, primarily due to increased volume in the automotive segment. Automotive cost of sales increased 7.6% ($3.6 million) to $51.1 million in the second quarter, and increased 8.0% ($7.5 million) to $101.2 million in the first half of fiscal 2000, as compared to the prior-year periods. As a percentage of segment sales, cost of sales decreased from 98.1% in fiscal 1999 second quarter to 96.8% in the current period, and from 98.7% in the first half of fiscal 1999 to 97.4% in the first half of fiscal 2000. This improvement reflects significant productivity gains made as a result of our cost reduction initiatives, substantially offset by a shift in product mix to lower margin side impact and driver inflators. Additional costs were also incurred in order to ramp up production to meet sharply higher customer demand for our side impact, second generation passenger and driver inflators. These costs are not expected to continue in subsequent quarters as operational efficiencies are now being realized. Further improvement is also expected as a result of additional cost reduction initiatives currently being implemented on these relatively new products. Production from our new inflator production facility represents 10 million of our 15 million unit annual inflator capacity. In fiscal 1999, this facility was operating significantly below capacity, averaging 29% utilization for the year. We have made significant progress by improving utilization to 58.5% in the second quarter. We expect continued improvement throughout fiscal 2000. Aerospace segment cost of sales decreased 8.5% to $8.3 million in the second quarter of fiscal 2000, as compared to the prior year. This decrease was primarily due to reduced sales as discussed above, however, the percentage decrease in cost of sales was significantly less than the decrease in sales due to higher than anticipated costs on the V-22, F-22, JASSM, and KEPD-350 development programs. These programs are strategically important in that there are significant potential new production orders following the development phase. We believe that upon successful completion of the development programs, we will be well positioned to secure future production orders. In accordance with generally accepted accounting principles, anticipated future losses of $1.3 million on these key programs were recognized in the current quarter. 10 GROSS MARGIN - ------------ Gross margin for the second quarter ended January 30, 2000 was $0.1 million (0.2% of net sales), as compared to $2.9 million (4.8% of net sales) for the prior year period. Gross margin for the six months ended January 30, 2000 was $2.5 million (2.1% of net sales), as compared to $4.4 million (3.8% of net sales) for the prior year period. Automotive segment gross margin improved by $.8 million (87.5%) to $1.7 million in the second quarter of fiscal 2000, and by $1.5 million (129.4%) to $2.7 million for the first half of fiscal 2000, as compared to the prior-year periods. This improvement in gross margin is primarily due to our cost reduction initiatives partially offset by less favorable product mix as discussed above. Aerospace segment gross margin was -$1.5 million (-23% of segment sales) for the second quarter of fiscal 2000, as compared to $2.0 million (17.9%) for the prior year period. The current quarter decrease in gross margin was primarily the result of reduced sales and higher than anticipated development costs as discussed above. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES - -------------------------------------------- Selling, general and administrative expenses for the second quarter and first half ended January 30, 2000 were $4.5 million (7.6% of net sales) and $8.8 million (7.4% of net sales) respectively, as compared to $3.1 million (5.2% of net sales) and $5.8 million (5.0% of net sales) for the prior year periods. The current year increase was primarily due to premium freight costs incurred to meet customer delivery schedules as a result of higher than expected demand for products manufactured in our new inflator production facility. RESEARCH AND DEVELOPMENT EXPENSES - --------------------------------- Research and development costs for the second quarter and first half ended January 30, 2000 were $1.5 million (2.4% of net sales) and $2.9 million (2.4% of net sales), respectively, as compared to $0.7 million (1.2% of net sales) and $1.7 million (1.5% of net sales) for the prior year periods. This increased R&D effort reflects continued work on our "smart" (dual-stage) inflators, curtain inflators, micro-gas generators for seat belt pretensioning systems, and other new products in various stages of development. OPERATING PROFIT (LOSS) - ----------------------- We recorded operating losses for the second quarter and first half of fiscal 2000 of $5.8 million (-9.8% of net sales) and $9.2 million (-7.7% of net sales), respectively, as compared to losses of $1.0 million (-1.6% of net sales) and $3.2 million (-2.8% of net sales) for the prior year periods. Operating losses were extended as a result of the downturn in our aerospace segment, and increased SG&A and R&D expenses as discussed above. 11 OTHER INCOME (EXPENSE) - ---------------------- Other expenses for the second quarter and first half of fiscal 2000 were $1.1 million (1.9% of net sales) and $2.2 million (1.8% of net sales), respectively, as compared to $0.4 million (0.8% of net sales) and $2.2 million (1.9% of net sales) for the prior-year periods. Royalty income from our Asian licensee, Daicel Chemical Industries, is earned throughout the year, with payment received annually in the fiscal fourth quarter. We began accruing this income on a quarterly basis in the second quarter of fiscal 1999 to reflect quarterly earned income and improve comparisons between quarters. As a result, the second quarter of 1999 has substantially lower expenses because it includes recognition of six month's royalty income of $1.5 million as compared with three months of recognition of $.8 million in the current quarter. Interest expense remained flat compared to the prior year due to our lower debt level being offset by higher effective interest rates. NET EARNINGS - ------------ We recorded net losses for the second quarter and first half of fiscal 2000 of $4.4 million (-7.3% of net sales) and $7.1 million (-6.0% of net sales), respectively, as compared to net losses of $1.0 million (-1.7% of net sales) and $3.7 million (-3.2% of net sales) for the prior year periods. Basic and diluted losses per share for the second quarter and first half of fiscal 2000 were $0.21 and $0.35, respectively, as compared to losses of $0.05 and $0.18 for the prior- year periods. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- Because it is due within the next 12 months (specifically December 18, 2000), we reclassified our entire $115 million revolving credit facility from long term debt to short term debt. As a result, our working capital decreased during the quarter to ($31.6) million from $61.7 million as of July 31, 1999. Exclusive of the effect of classifying our debt as current, our working capital increased to $83.4 million primarily resulting from the accumulation of cash, which would otherwise have been used to pay down debt. During the six months ended January 30, 2000, we made capital expenditures totaling approximately $10.0 million, which were funded from cash flows from operations and bank borrowings. On April 10, 1998, we entered into a four-year, $180 million Amended and Restated Revolving Credit Agreement with a group of seven banks. This agreement was amended on June 11, 1998, December 10, 1998, and December 9, 1999. The available amount under the credit facility has been reduced by agreement to $115 million. The amounts outstanding under the facility are secured by substantially all of our assets. At our request, this agreement was again amended on February 17, 2000 to, among other things, waive compliance with the tangible net worth, debt to EBITDA, and minimum interest coverage covenants for the second quarter of fiscal 2000, and to add an additional covenant compliance period as of March 31, 2000 to the regular quarterly compliance period (April 30, 2000). There can be no assurance that we will achieve compliance at either of these dates, therefore, we may be required to seek additional waivers from the bank group. Our principal bank is acting as agent for the banks under this agreement. At January 30, 2000, the applicable interest rate was 8.08%, and we had $115.0 million of debt outstanding under this credit facility. Our debt, net of cash, was $95.6 million at January 30, 2000. This credit facility expires on December 18, 2000, and we are currently assessing our alternatives with respect to refinancing this indebtedness. Anticipated working capital requirements, capital expenditures, and facility expansions are expected to be met from internally generated funds. 12 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK None 13 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS None ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At the Company's annual shareholders' meeting held on January 11, 2000, nine directors were elected. No other matters were submitted to a vote by security holders.
Results of Shareholders' Voting at Annual Meeting Votes Cast ----------------------------------------------- Directors Elected: For Against Withheld No Proxy Total Shares Received Outstanding -------------- ------------ --------------- ---------------- --------------- Robert J. Schultz, 16,162,549 --- 466,457 3,987,258 20,616,264 Chairman Charles B. Kafadar 16,146,365 --- 482,641 3,987,258 20,616,264 George S. Ansell 16,151,838 --- 477,168 3,987,258 20,616,264 Erwin H. Billig 16,151,267 --- 477,739 3,987,258 20,616,264 James R. Burnett 16,165,311 --- 463,695 3,987,258 20,616,264 Richard L. Corbin 16,153,197 --- 475,809 3,987,258 20,616,264 Philip E. Johnson 16,169,577 --- 459,429 3,987,258 20,616,264 Donald E. Miller 16,154,688 --- 474,318 3,987,258 20,616,264 Lewis W. Watson 16,153,482 --- 475,524 3,987,258 20,616,264
14 ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 10.2 Fourth Amendment and Waiver to Amended and Restated Revolving Credit Agreement 10.3 Agreement and Plan of Merger (incorporated by reference from Exhibit 2.1 to the Company's Report on Form 8-K filed on March 13, 2000). 27.1 Financial Data Schedule (b) Reports on Form 8-K Form 8-K filed March 13, 2000. Items 2 and 7 reported. 15 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 15, 2000 /S/ J. Thompson McConathy - --------------------- ----------------------------- Date J. Thompson McConathy Vice President Finance (Principal Financial and Accounting Officer) March 15, 2000 /S/ Charles B. Kafadar - --------------------- ------------------------- Date Charles B. Kafadar Chief Executive Officer (Principal Executive Officer) 16 EX-10.2 2 REVOLVING CREDIT AGREEMENT EXHIBIT 10.2 FOURTH AMENDMENT AND WAIVER TO AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT --------------------------------------- FOURTH AMENDMENT AND WAIVER TO AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT dated as of January 31, 2000 (this "Amendment") among OEA, INC., a Delaware corporation (the "Company"), each of the banks named under the caption "Banks" on the signature pages hereof (individually, a "Bank" and, collectively, the "Banks"), BANQUE NATIONALE DE PARIS, U.S. BANK NATIONAL ASSOCIATION and UNION BANK OF CALIFORNIA, N.A., as Co-Agents and THE NORTHERN TRUST COMPANY, as agent for the Banks (in such capacity, together with its successors in such capacity, the "Agent"). WHEREAS, the Company, the Agent, the Co-Agents and the Banks have entered into an Amended and Restated Revolving Credit Agreement dated as of April 10, 1998, as amended by a First Amendment thereto dated as of June 11, 1998, a Second Amendment thereto dated December 10, 1998, and a Third Amendment and Waiver thereto dated as of December 9, 1999 (as amended the "Existing Agreement"), pursuant to which the Banks agreed to make Loans (as defined in the Existing Agreement) to the Company in an aggregate principal amount not to exceed $115,000,000 at any time outstanding, on and subject to the terms and conditions thereof; and WHEREAS, the parties wish to amend the Existing Agreement to (a) modify certain covenants, and (b) waive certain Events of Default. NOW, THEREFORE, the parties agree as follows: Section 1. Definitions. Terms defined in the introductory paragraphs hereof shall have their respective defined meanings when used in this Amendment and, except as otherwise expressly provided herein, terms defined in the Existing Agreement shall have their respective defined meanings when used in this Amendment. In addition, the following terms shall have the following meanings (terms defined in the introductory paragraphs or this Section 1 in the singular to have correlative meanings when used in the plural and vice versa): "Effective Date" shall mean as of January 31, 2000, which will be deemed to occur upon the first date, if any, which occurs before the termination of this Amendment pursuant to Section 6 hereof and on which the conditions precedent in Section 4 shall have been satisfied. Section 2. Amendments to Existing Agreement. The following amendments are hereby made to the Existing Agreement with effect from and after the Effective Date: (a) Section 8.3(f) of the Existing Agreement. Section 8.3(f) of the Existing Agreement is hereby amended by adding the following before the period: "and grant access to, and the Company hereby grants access to the Agent and each Bank and their respective representatives to, any and all third party consultants or advisors now or hereafter retained by the Company in order to discuss such matters and obtain such information as any Bank or the Agent may reasonably request." (b) Section 8.5 of the Existing Agreement. Section 8.5 of the Existing Agreement is hereby amended by (i) adding the phrase "or any substantial part of" after the phrase "dispose of all" appearing in the introductory clause thereof and (ii) deleting clause (c) thereof in its entirety. (c) Section 8.8 of the Existing Agreement. Section 8.8 of the Existing Agreement is hereby amended by putting a period after clause (i) of the proviso therein and deleting everything appearing thereafter in such Section. (d) Sections 8.10, 8.11, 8.12 and 8.13 of the Existing Agreement. Sections 8.10, 8.11, 8.12 and 8.13 of the Existing Agreement are each hereby amended as of the date hereof by adding the following at the end of each thereof: "In addition, the foregoing financial test shall be measured as of March 31, 2000 and the Company shall be in compliance therewith on March 31, 2000. On or before April 7, 2000, the Company shall furnish to each Bank a certificate of a senior financial officer of the Company (i) to the effect that no Default has occurred and is continuing (or, if any Default has occurred and is continuing, describing the same in reasonable detail and describing the action that the Company has taken and proposes to take with respect thereto) and (ii) setting forth in reasonable detail the computation necessary to determine whether the Company is in compliance with this financial covenant as of March 31, 2000." (e) Section 8.18 of the Existing Agreement. Section 8.18 of the Existing Agreement is hereby amended and restated in its entirety as follows: "8.18 Big Five Accounting Firm. Upon written request of the Agent, the Company agrees to promptly, and in any event within ten (10) days of such written notice, hire, for its own account and expense, any one of the "Big Five" accounting firms in the Untied States, to determine, among other things, the enterprise value of the Company and its Subsidiaries, the on- going value of the Collateral and the on-going value of the Company's and its Subsidiaries' business systems; to prepare a written report of its findings addressed to the Company with a copy to the Agent and the Banks; and to cooperate with the Agent and the Banks with respect to such matters as the Agent or any Bank may reasonably request." (f) Section 9(d) of the Existing Agreement. Section 9(d) of the Existing Agreement is hereby amended by adding "or 8.18" immediately after "8.17" appearing therein. Section 3. Waiver. The Company has advised the Agent and the Banks that it is not or has not been in compliance with Section 8.10 (Tangible Net Worth), Section 8.11 (Indebtedness to EBITDA) and Section 8.13 (Minimum Interest Coverage) of the Existing Agreement for its fiscal quarter ended January 31, 2000. On the Effective Date, as of and -2- through January 31, 2000, the Agent and the Majority Banks waive compliance by the Company with Sections 8.10, 8.11 and 8.13. The Agent's and Majority Banks' waiver of non-compliance with Sections 8.10, 8.11 and 8.13 of the Existing Agreement is limited to the specific instance of failure to comply which is described above and shall not be deemed a waiver of or consent to any other failure to comply with the terms of Section 8.10, 8.11 or 8.13 of the Existing Agreement or any other provisions of the Existing Agreement. Such waiver shall not prejudice or constitute a waiver of any right or remedies which the Agent or Banks may have or be entitled to with respect to any other breach of Section 8.10, 8.11 or 8.13 or any other provisions of the Existing Agreement. Section 4. Conditions to Effective Date. The occurrence of the Effective Date shall be subject to the satisfaction, on and as of the Effective Date, of the following conditions precedent: (a) Amendment. The Company, the Agent and the Majority Banks shall have executed and delivered this Amendment. (b) No Default. After giving effect to the waiver in Section 3 hereof, no Default or Event of Default shall have occurred and be continuing under the Existing Agreement and the representations and warranties of the Company in Section 7 of the Existing Agreement, as amended hereby, and in Section 8 hereof shall be true and correct on and as of the Effective Date (except to the extent such representations and warranties state that they relate solely to a specified date, then as of such specified date) and the Company shall have provided to the Agent a certificate of a senior officer of the Company to that effect. (c) Certificate of Incorporation. The Company shall have delivered to the Agent, in form and substance satisfactory to the Agent, a certificate of the secretary or assistant secretary of the Company (i) confirming that the certificate of incorporation and by-laws of the Company have not been amended since December 9, 1999 or (ii) setting forth a true and correct copy of any amendment to the certificate of incorporation or by-laws of the Company adopted on or after December 9, 1999. (d) Company Resolutions. The Company shall have delivered to the Agent a copy, duly certified by the secretary or an assistant secretary of the Company, of (i) resolutions of the Company's Board of Directors authorizing or ratifying the execution and delivery of this Amendment, and authorizing the borrowings under the Existing Agreement, as amended hereby, (ii) all documents evidencing other necessary corporate action, and (iii) all approvals or consents, if any, with respect to this Amendment. (e) Company Incumbency Certificate. The Company shall have delivered to the Agent a certificate of the secretary or an assistant secretary of the Company certifying the names of the Company's officers authorized to sign this Amendment and all other documents or certificates to be delivered hereunder and thereunder, together with the true signatures of such officers. -3- (f) Legal Opinion. The Company shall have delivered to the Agent an opinion of the Company's counsel, in the form and substance satisfactory to the Agent. (g) Amendment Fee. The Company shall have paid to the Agent, for the account of the Banks who have approved in writing the transactions contemplated by this Amendment on or before the close of business, Chicago time, on February 17, 2000, a fee equal to the product of 10 basis points times the Commitment of such approving Bank in effect on the Effective Date. Such fee shall be non- refundable after February 17, 2000 unless the Majority Banks fail to sign this Amendment. (h) Other. The Company shall have delivered such other documents as the Agent may reasonably request. Section 5. Effective Date Notice. Promptly following the occurrence of the Effective Date, the Agent shall give notice to the parties hereto of the occurrence of the Effective Date, which notice shall be conclusive, and all parties may rely thereon; provided, that such notice shall not waive or otherwise limit any right or remedy of the Agent or any Bank arising out of any failure of any condition precedent set forth in Section 4 to be satisfied. Section 6. Termination. If the Effective Date shall not have occurred on or before February 17, 2000, the Agent on instructions of the Majority Banks may terminate this Amendment by notice in writing to the Company at any time before the occurrence of the Effective Date; provided, that the obligations of the Company under Section 13 shall survive such termination. Section 7. Ratification. The parties agree that the Existing Agreement, as amended hereby, the OEA Pledge Agreement, as heretofore amended, the other Security Documents and the Notes have not lapsed or terminated, are in full force and effect, and are and from and after the Effective Date shall remain binding in accordance with their terms, as amended hereby. Section 8. Representations and Warranties. The Company represents and warrants to the Agent and the Banks that: (a) No Breach. The execution, delivery and performance by the Company of this Amendment and the Existing Agreement, as amended hereby, do not and will not conflict with or result in a breach of, or cause the creation of a Lien (other than as contemplated by the Security Documents) or require any consent under, the certificate of incorporation or by-laws of the Company, or any applicable law or regulation, or any order, injunction or decree of any court or governmental authority or agency, or any agreement or instrument to which the Company or any of its Subsidiaries is a party or by which any of them is bound. (b) Incorporation, Corporate Power and Action, Binding Effect. The Company has been duly incorporated and is validly existing in good standing under the laws of the State of Delaware and has all necessary corporate power and authority to execute, deliver and perform its obligations under this Amendment and the Existing Agreement, as amended hereby; the execution, delivery and performance by the Company of this Amendment and the Existing -4- Agreement, as amended hereby, have been duly authorized by all necessary corporate action on its part; and this Amendment has been duly and validly executed and delivered by the Company and constitutes a legal, valid and binding obligation, enforceable in accordance with its terms. (c) Approvals. No authorizations, approvals or consents of, and no filings or registrations with, any governmental or regulatory authority or agency are necessary for the execution, delivery or performance by the Company of this Amendment, the Existing Agreement as amended hereby, or for the validity or enforceability thereof. Section 9. Certain Usages. From and after the Effective Date, each reference to the Existing Agreement in the Existing Agreement or in any other agreements, documents or instruments referred to or provided for in or delivered under the Existing Agreement shall be deemed to refer to the Existing Agreement, as amended hereby. Section 10. Successors and Assigns. This Amendment and the Pledge Amendment shall be binding upon and inure to the benefit of the Company, the Agent, the Banks and their respective successors and assigns, except that the Company may not transfer or assign any of its rights or interest hereunder or thereunder. Section 11. Governing Law. This Amendment shall be governed by, and construed interpreted in accordance with, the internal laws of the State of Illinois. Section 12. Counterparts. This Amendment may be executed in any number of counterparts and any party hereto may execute any one or more of such counterparts, all of which shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Amendment by telecopier shall be as effective as delivery of a manually executed counterpart of this Amendment. Section 13. Expenses. Whether or not the Effective Date shall occur, without limiting the obligations of the Company under the Existing Agreement, the Company agrees to pay, or to reimburse on demand, all reasonable costs and expenses incurred by (i) the Agent in connection with the negotiation, preparation, execution, delivery, modification, amendment or enforcement of this Amendment and the other agreements, documents and instruments referred to herein or therein, including the reasonable fees and expenses of Gardner, Carton & Douglas, special counsel to the Agent, and (ii) any Bank in connection with enforcement of this Amendment, the Existing Agreement as amended hereby, and the agreements, documents and instruments referred to herein or therein, including the reasonable fees and expenses of counsel to such Bank. [Remainder of Page Intentionally Left Blank.] -5- IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly authorized officers as of the day and year first above written. OEA, INC. By: ----------------------------- Name: Title: THE NORTHERN TRUST COMPANY, as Agent By: ----------------------------- Name: Title: THE NORTHERN TRUST COMPANY, as Issuing Lender By: ----------------------------- Name: Title: BANKS: THE NORTHERN TRUST COMPANY, individually By: ----------------------------- Name: Title: BANQUE NATIONALE DE PARIS, individually and as Co- Agent By: ----------------------------- Name: Title: By: ----------------------------- Name: Title: U.S. BANK NATIONAL ASSOCIATION, individually and as Co-Agent By: ----------------------------- Name: Title: UNION BANK OF CALIFORNIA, N.A., individually and as Co-Agent By: ----------------------------- Name: Title: CREDIT AGRICOLE INDOSUEZ, individually By: ----------------------------- Name: Title: By: ----------------------------- Name: Title: LASALLE BANK NATIONAL ASSOCIATION, individually By: ----------------------------- Name: Title: GENERAL ELECTRIC CAPITAL CORPORATION, individually By: ----------------------------- Name: Title: EX-27.1 3 FINANCIAL DATA SCHEDULE
5 3-MOS 6-MOS JUL-31-2000 JUL-31-2000 NOV-01-1999 AUG-01-1999 JAN-30-2000 JAN-30-2000 19,409,000 19,409,000 0 0 37,694,000 37,694,000 0 0 45,250,000 45,250,000 116,272,000 116,272,000 294,423,000 294,423,000 104,448,000 104,448,000 311,054,000 311,054,000 147,834,000 147,834,000 0 0 0 0 0 0 2,202,000 2,202,000 144,571,000 144,571,000 311,054,000 311,054,000 59,568,000 119,542,000 59,568,000 119,542,000 59,420,000 116,998,000 65,388,000 128,706,000 1,126,000 2,161,000 0 0 2,245,000 4,126,000 (6,947,000) (11,325,000) (2,576,000) (4,200,000) (4,371,000) (7,125,000) 0 0 0 0 0 0 (4,371,000) (7,125,000) (.21) (.35) (.21) (.35)
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