-----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, DmBKqF/FkPJmCzaeQKJHi6M19sSJNCdToKH0IwIit0iNMtYFtacoPQ9dn0jg0Uen yCxeF1lzguja2uJzxyXmNQ== 0000074697-97-000003.txt : 19970318 0000074697-97-000003.hdr.sgml : 19970318 ACCESSION NUMBER: 0000074697-97-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970131 FILED AS OF DATE: 19970317 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPTICAL COATING LABORATORY INC CENTRAL INDEX KEY: 0000074697 STANDARD INDUSTRIAL CLASSIFICATION: OPTICAL INSTRUMENTS & LENSES [3827] IRS NUMBER: 680164244 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-02537 FILM NUMBER: 97557268 BUSINESS ADDRESS: STREET 1: 2789 NORTHPOINT PKWY CITY: SANTA ROSA STATE: CA ZIP: 95407 BUSINESS PHONE: 7075456440 MAIL ADDRESS: STREET 1: 2789 NORTHPOINT PARKWAY CITY: SANTA ROSA STATE: CA ZIP: 95407-7397 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Mark one [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended JANUARY 31, 1997 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ OPTICAL COATING LABORATORY, INC. (Exact name of registrant as specified in its charter) COMMISSION FILE NUMBER 0-2537 DELAWARE 68-0164244 (State or other jurisdiction of (IRS Identification No.) incorporation or organization) 2789 NORTHPOINT PARKWAY, SANTA ROSA CALIFORNIA 95407-7397 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (707) 545-6440 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 [ ] APPLICABLE ONLY TO CORPORATE ISSUERS Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Classes of Common Stock: COMMON STOCK, $.01 PAR VALUE Outstanding at February 28, 1997: 10,176,723 shares This document contains 15 pages. The Exhibit listing appears on Page 14. PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS JANUARY 31, OCTOBER 31, ASSETS 1997 1996 (Amounts in thousands) (Unaudited) CURRENT Cash and short-term investments $10,056 $ 16,027 ASSETS Accounts receivable, net of allowance for doubtful accounts of $1,779 and $1,775 31,090 27,700 Inventories 18,995 18,701 Income taxes receivable 395 1,248 Deferred income tax assets 6,663 5,165 Other current assets 2,122 1,230 Total Current Assets 69,321 70,071 OTHER Deferred income tax assets 3,238 4,451 ASSETS Other assets and investments 9,580 10,680 PROPERTY, Land and improvements 9,176 9,200 PLANT AND Buildings and improvements 41,580 40,953 EQUIPMENT Machinery and equipment 112,977 112,326 Construction-in-progress 6,664 6,190 170,397 168,669 Less accumulated depreciation (83,556) (81,100) Property, plant and equipment-net 86,841 87,569 Total Assets $168,980 $172,771 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT Accounts payable $ 5,853 $ 7,199 LIABIL- Accrued expenses 7,102 6,566 ITIES Accrued compensation expenses 5,980 7,057 Income taxes payable 1,701 1,823 Current maturities on long-term debt 5,583 4,981 Notes payable 2,485 3,112 Deferred revenue 1,415 1,246 Total Current Liabilities 30,119 31,984 NON- CURRENT Accrued postretirement health benefits LIABIL- and pension liabilities 2,293 2,308 ITIES Deferred income tax liabilities 1,821 1,804 Long-term debt 43,868 45,788 Minority interest 11,848 11,328 Convertible redeemable preferred stock 11,309 11,309 COMMON Common stock, $.01 par value; authorized STOCK- 30,000,000 shares; issued and HOLDERS' outstanding EQUITY 9,791,000 and 9,761,000 shares 98 98 Paid-in capital 47,485 47,219 Retained earnings 21,065 20,984 Cumulative foreign currency translation adjustment (926) (51) Common Stockholders' Equity 67,722 68,250 Total Liabilities and Stockholders' Equity $168,980 $172,771 The accompanying notes are an integral part of these financial statements. OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) For the three months ended January 31, 1997 and 1996 (Amounts in thousands, except per share amounts) 1997 1996 REVENUES Revenues $45,720 $43,911 Cost of sales 30,199 29,495 Gross Profit 15,521 14,416 COSTS AND Operating Expenses: EXPENSES Research and development 2,562 2,388 Selling and administrative 10,266 9,107 Amortization of intangibles 243 287 Total Operating Expenses 13,071 11,782 Income from Operations 2,450 2,634 Nonoperating Income (Expense): Interest income 175 74 Interest expense (1,052) (911) EARNINGS Income Before Provision for Income Taxes and Minority Interest 1,573 1,797 Provision for income taxes 630 754 Minority interest 36 303 Net Income 907 740 Dividend on convertible redeemable preferred stock 240 240 Net Income Applicable to Common Stock $ 667 $ 500 Net Income Per Common and Common Equivalent Share $ .07 $ .05 Weighted average number of common shares used to compute earnings per share 10,165 10,119 The accompanying notes are an integral part of these financial statements. OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) For the three months ended January 31, 1997 and 1996 (Amounts in thousands, except per share amounts) 1997 1996 OPERA- Cash Flows From Operations: TIONS Cash received from customers $41,641 $42,911 Interest received 164 101 Cash paid to suppliers and employees (41,811) (37,568) Cash paid to ESOP+ (31) Interest paid (1,426) (2,892) Income taxes paid, net of refunds (51) (4,633) Net Cash Used For Operations (1,514) (2,081) INVEST- Cash Flows From Investments: MENTS Purchase of plant and equipment (3,078) (5,421) Proceeds from sale-leaseback of new equipment 5,900 Net Cash (Used For) Provided By Investments (3,078) 479 FINANCING Cash Flows From Financing: Proceeds from long-term debt 2,600 Proceeds from notes payable 8 154 Proceeds from exercise of stock options 96 198 Proceeds from note to minority stockholder 484 Repayment of long-term debt (481) (2,468) Repayment of notes payable (418) Payment of dividend on preferred stock (240) (240) Payment of dividend on common stock (586) (571) Net Cash Used For Financing (1,137) (327) Effect of exchange rate changes on cash (242) (118) Decrease in cash and short-term investments (5,971) (2,047) Cash and short-term investments at beginning of period 16,027 6,602 Cash and short-term investments at end of period $ 10,056 $ 4,555 OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (Unaudited) For the three months ended January 31, 1997 and 1996 (Amounts in thousands) 1997 1996 ADJUST- Reconciliation of Net Income To MENTS Cash Flows From Operations: Net income $ 907 $ 740 Adjustments to reconcile net income to net cash used for operations: Depreciation and amortization 3,246 3,178 Minority interest in earnings of Flex Products 36 303 Loss on disposal or abandonment of equipment 42 2 Accrued postretirement health benefits 16 11 Deferred income tax liabilities 27 97 Other non-cash adjustments to net income 109 (82) Change in: Accounts receivable (4,011) (1,337) Inventories (599) (883) Income tax receivable 852 (1,589) Deferred income tax assets (325) 531 Other current assets and other assets and investments (546) (875) Accounts payable, accrued expenses and accrued compensation expenses (1,452) (2,406) Deferred revenue 169 74 Income taxes payable 15 155 Total adjustments (2,421) (2,821) Net Cash Used For Operations $(1,514) $(2,081) The accompanying notes are an integral part of these financial statements. OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS' EQUITY (Unaudited) For the three months ended January 31, 1997 (Amounts in thousands) Foreign Common Stock Paid-in Retained Currency Shares Amount Capital Earnings Translation BALANCE AT NOVEMBER 1, 1996 9,761 $98 $47,219 $20,984 $ (51) Shares issued to Employee Stock Ownership Plan 15 159 Exercise of stock options, including tax benefit and shares issued to directors 15 107 Foreign currency translation adjustment (875) Net income 907 Dividend on preferred stock (240) Dividend on common stock (586) BALANCE AT JANUARY 31, 1997 9,791 $98 $47,485 $21,065 $(926) The accompanying notes are an integral part of these statements. OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Three Months Ended January 31, 1997 and 1996 (Unaudited) 1. GENERAL Optical Coating Laboratory, Inc. (OCLI) develops, manufactures and sells thin film coated products. Thin film coatings control and enhance light by altering the transmission, reflection and absorption of the various wavelengths of light energy to achieve a desired effect such as anti- reflection, shielding, conductivity or abrasion resistance. OCLI markets and sells its products worldwide to original equipment manufacturers (OEM's) who utilize thin film coated components or devices for optical and electro-optical systems for computers, photocopiers, LCD desktop projectors, scanners, instruments and satellites. OCLI sells its Glare/Guard(R) ergonomic computer display products through distributors and office supply retailers. Flex Products, Inc. (Flex Products), OCLI's 60% owned subsidiary, develops and manufactures thin film coatings on plastic film with a proprietary high speed process. The Condensed Consolidated Balance Sheet as of January 31, 1997, the Condensed Consolidated Statements of Income for the three month periods ended January 31, 1997 and 1996, the Condensed Consolidated Statement of Common Stockholders' Equity for the three month period ended January 31, 1997 and the Condensed Consolidated Statements of Cash Flows for the three month periods ended January 31, 1997 and 1996 have been prepared by the Company without audit. In the opinion of management, all adjustments consisting of normal recurring accruals, necessary to present fairly the financial position, results of operations and cash flows at January 31, 1997 and for all periods presented have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes included in the Company's Annual Report on Form 10-K for the year ended October 31, 1996. The results of operations for the period ended January 31, 1997 are not necessarily indicative of the operating results anticipated for the full year. 2. INVENTORIES Inventories consisted of the following: JANUARY 31, OCTOBER 31, (Amounts in thousands) 1997 1996 Raw materials and supplies $7,804 $7,483 Work-in-process 8,813 8,797 Finished goods 2,378 2,421 Total inventories $18,995 $18,701 3. ACCRUED EXPENSES Accrued expenses at January 31, 1997 and October 31, 1996 consisted of the following: JANUARY 31, OCTOBER 31, (Amounts in thousands) 1997 1996 Workers' compensation reserve $ 695 $ 659 Ground water remediation reserve 759 659 Other accrued liabilities 5,648 5,248 $7,102 $6,566 4. LONG-TERM DEBT Long-term debt, including current maturities, at January 31, 1997 and October 31, 1996 consisted of the following: JANUARY 31, OCTOBER 31, (Amounts in thousands) 1997 1996 Unsecured senior notes. Interest at 8.71% payable semiannually. Principal payable in annual installments of $3.6 million from 1998 through 2002. $18,000 $18,000 Unsecured bank term loan. Variable interest rates averaging 6.9% at October 31, 1996, payable quarterly. Principal payable semiannually as follows: Payment Dates Amounts April 1997 $1,000,000 Each October and April thereafter $2,000,000 13,000 13,000 Mortgage payable. Interest at 8%. Collateralized by a 72,000 sq. ft. newly constructed building and related land. Principal and interest payments of $25,000 per month through 2011. 2,498 2,523 Mortgage payable. Interest at 7.5%. Collateralized by a 65,000 sq. ft. newly constructed building and related land leased to Flex Products. Principal and interest payments of $28,000 per month through 2011. 2,916 2,945 Land improvement assessment. Interest at an average rate of 6.75%. Principal and interest payable in semiannual installments of $77,000 through 1998. 210 276 Scottish Development Agency (SDA) building loan, with a conditional interest moratorium from February 1, 1995 through January 31, 1998 with interest at 9.5% thereafter. Semiannual principal payments of approximately $100,000 are payable through January 1998 with subsequent payments of $331,000, comprising principal and interest, through 2006. Collateralized by the land and building of the Company's Scottish subsidiary. 3,898 3,996 Notes payable to private parties in connection with the purchase of the Company's wholly-owned subsidiary in Germany (MMG). Principal and interest at 8% payable over ten years in quarterly installments of approximately $420,000 through 2003. 5,490 6,188 Bank loans of MMG with interest rates ranging from 4.5% to 8.0%. Payable in semiannual and annual installments through 2005. Partly collateralized by mortgages on MMG land and buildings and liens on equipment. 3,378 3,760 Present value of obligations under capital leases at an imputed interest rate of 8.0% payable in monthly installments through 2004. 61 81 49,451 50,769 Less current maturities (5,583) (4,981) Total long-term debt, net of current maturities $43,868 $45,788 The Company has a $30 million unsecured credit facility comprised of a $15 million term loan and a $15 million revolving line of credit. The revolving line of credit carries a commitment fee of .375% per year on the unused portion of the facility and expires on April 28, 2000. The Company has an incremental credit facility to cover a surety letter for approximately $3.1 million issued to secure 50% of the Company's notes payable arising from the purchase of MMG. The Company also has a letter of credit for approximately $903,000 to satisfy the Company's workers' compensation self- insurance requirements. The surety commitment and letter of credit facilities carry a fee of 1.25% per year. The Company's subsidiary in Scotland has a credit arrangement of up to approximately $490,000 at market interest rates and has outstanding letters of credit of approximately $330,000 to guarantee import duty. There were no borrowings under the credit arrangement in fiscal years 1997 or 1996. The Company's subsidiary in Germany has various credit facilities with local banks totaling approximately $3.1 million which are used for working capital requirements. These credit facilities are utilized as part of normal local payment practices. During 1996, the Company entered into three sale/lease-back arrangements for a newly acquired continuous coating machine and related equipment and for two newly acquired coating machines to be used in the manufacturing operations of Flex Products. The lease terms are six years with monthly payments totaling approximately $290,000 and buyout provisions at the end of each lease. The Company has certain financial covenants and restrictions under its bank credit arrangements and the unsecured senior notes. 5. STOCK OPTIONS During the first quarter of 1997, 364,300 options were granted under the Company's incentive compensation and employee stock option plans. At January 31, 1997, 2,147,883 shares are subject to outstanding options, of which 1,148,304 options are exercisable. Options to purchase 393,829 shares of common stock are available for future grants under the plans. 6. CONVERTIBLE REDEEMABLE PREFERRED STOCK On February 25, 1997, 4,000 shares of the Company's 8% Series C Convertible Redeemable Preferred Stock were converted into approximately 386,000 shares of common stock at the conversion price of $10.50 per share. PART I. FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND CHANGES IN FINANCIAL CONDITION THE INFORMATION CONTAINED IN MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION INCLUDES FORWARD LOOKING STATEMENTS WHICH ARE TYPICALLY IDENTIFIED BY THE WORDS "ANTICIPATES," "BELIEVES," "EXPECTS," "INTENDS," "FORECASTS," "PLANS," "FUTURE," "STRATEGY," OR WORDS OF SIMILAR IMPORT. VARIOUS IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN THE FORWARD LOOKING STATEMENTS ARE IDENTIFIED BELOW. ACTUAL RESULTS MAY VARY SIGNIFICANTLY BASED ON A NUMBER OF FACTORS INCLUDING, BUT NOT LIMITED TO, PRODUCT DEVELOPMENT, COMMERCIALIZATION AND TECHNOLOGICAL DIFFICULTIES; MANUFACTURING COSTS AND YIELD ISSUES ASSOCIATED WITH INITIATING PRODUCTION AT NEW FACILITIES; THE IMPACT OF COMPETITIVE PRODUCTS AND PRICING; CHANGING CUSTOMER REQUIREMENTS; AND THE CHANGE IN ECONOMIC CONDITIONS OF THE VARIOUS MARKETS THE COMPANY SERVES. RESULTS OF OPERATIONS REVENUE. Revenue for the first quarter of fiscal 1997 was $45.7 million, compared to revenues of $43.9 million in the first quarter of fiscal 1996. 1997 revenues were higher in the company's defense and aerospace business for products used on communications satellites, in the Company's security products business for products produced by the Company's 60% owned subsidiary, Flex Products Inc. (Flex Products) and in the Company's display products business for computer aftermarket products and products used in projection display applications. Revenues for the company's office automation business decreased in the first quarter of 1997 compared to the prior year. GROSS PROFIT. Gross profit for the first quarter of fiscal 1997 was $15.5 million or 33.9% of revenue compared to $14.4 million or 32.8% of revenue for the first quarter of fiscal 1996. The 1997 gross profit improvement was primarily due to increased sales of higher margin products in the Company's defense and aerospace business, improvements in throughput and yield of the Company's new continuous coating facility and other benefits resulting from the Company's yield and cycle time improvement initiatives. Gross profit was down for the Company's manufacturing operation in Germany due to decreased demand for its office automation products and for the Flex Products operation due to additional costs of bringing its new coating machine online. RESEARCH AND DEVELOPMENT. Research and development expenditures in the first quarter of 1997 were $2.5 million compared to $2.4 million in 1996. Research and development expenditures were higher in the Company's Flex Products operation for the development of state-of-the-art coating processes for use in its new coating machine and were lower for the rest of the company due to the focus of technical resources on improvement of the Company's currently existing products and processes. SELLING AND ADMINISTRATIVE. Selling and administrative expenses in the first quarter of fiscal 1997 were $10.3 million compared to $9.1 million for the first quarter of 1996. The 1997 increase was primarily due to allocation of resources to marketing initiatives in targeted product areas, the accrual of bonuses in specific business areas for meeting or exceeding targeted financial performance and additional legal expense for defending a lawsuit with SICPA holding, S.A. INCOME FROM OPERATIONS. As a result of the foregoing changes in revenue, gross profit and operating expenses, the Company's income from operations was $2.5 million for the first quarter of fiscal 1997 compared to $2.6 million for the first quarter of fiscal 1996. INTEREST INCOME AND EXPENSE. Interest income for the first quarter of fiscal 1997 was $175,000 compared to interest income of $74,000 for the first quarter of fiscal 1996. Interest expense, net of capitalized interest, for the first quarter of 1997 was $1.1 million compared to $911,000 for the first quarter of fiscal 1996. INCOME TAXES AND MINORITY INTEREST. The effective income tax rate was 40% for the first quarter of 1997 and 42% for the first quarter of 1996. The 1997 decrease is due to the benefit of business tax credits. Minority interest, representing the 40% share of Flex Products' net income accruing to the minority stockholder, was $36,000 in 1997 compared to $303,000 for the first quarter of 1996. NET INCOME. The Company had net income applicable to common stock of $667,000, or $.07 per share, for the first quarter of fiscal 1997 compared to $500,000, or $.05 per share, for the first quarter of fiscal 1996 FINANCIAL CONDITION In 1997, the Company's cash and short-term investment position decreased by $6.0 million. $1.5 million was used for operations, $3.1 million was invested in plant and equipment, $826,000 was used to pay dividends and $481,000 was used to pay long-term debt during the quarter. In 1997, the Company's working capital, excluding cash and short-term investments increased $7.1 million, primarily due to increased accounts receivable (resulting from shipments late in the quarter), decreased accounts payable and decreased accrued compensation (resulting from payment of severance that had been accrued at the end of fiscal 1996). During the first quarter of 1997, as part of an innovative program to modernize its business processes, the Company purchased a state-of-the-art Enterprise Resource Planning System. The estimated cost of the system, including hardware, software, training and consulting, is approximately $4 million to $5 million. Management believes that the cash on hand at January 31, 1997, cash anticipated to be generated from future operations and the available funds from revolving credit arrangements will be sufficient for the Company to meet its near-term working capital needs, capital expenditures, debt service requirements and payment of dividends as declared. SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1996 Except for historical information contained in this report, matters discussed in this report are forward-looking statements that involve risks and uncertainties. Actual results may vary significantly based on a number of factors including, but not limited to, product development, commercialization and technological difficulties, manufacturing costs and yield issues associated with initiating production at new facilities, the impact of competitive products and pricing, changing customer requirements and the change in economic conditions of the various markets the Company serves. INDEPENDENT ACCOUNTANTS' REVIEW The January 31, 1997 condensed consolidated financial statements included in this filing on Form 10-Q have been reviewed by Deloitte & Touche LLP (which makes reference to the report of other accountants), independent accountants, in accordance with established professional standards and procedures for such a review. The report of Deloitte & Touche LLP commenting on their review follows. INDEPENDENT ACCOUNTANTS' REPORT To the Board of Directors and Stockholders of Optical Coating Laboratory, Inc. Santa Rosa, California We have reviewed the accompanying condensed consolidated balance sheet of Optical Coating Laboratory, Inc. and subsidiaries as of January 31, 1997, and the related condensed consolidated statements of income and cash flows for the three-month periods ended January 31, 1997 and 1996 and the related condensed consolidated statement of stockholders' equity for the three- month period ended January 31, 1997. These financial statements are the responsibility of the Company's management. We were furnished with the report of other accountants on their review of the interim financial information of Flex Products, Inc. (a consolidated subsidiary), whose total assets constituted 11% of consolidated total assets at January 31, 1997 and whose total revenues constituted 17% of consolidated total revenues for the three-month period ended January 31, 1997. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists of applying analytical review procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review and the report of other accountants, we are not aware of any material modifications that should be made to such condensed consolidated financial statements for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Optical Coating Laboratory, Inc. and subsidiaries as of October 31, 1996, and the related consolidated statements of income, stockholders' equity, and cash flows for the year then ended (not presented herein); and in our report dated December 18, 1996, we expressed an unqualified opinion on those consolidated financial statements based on our audit and the report of other auditors on their audit of Flex Products, Inc. (a consolidated subsidiary). In our opinion, based on our audit, and the report of other auditors, the information set forth in the accompanying condensed consolidated balance sheet as of October 31, 1996 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. Deloitte & Touche LLP San Jose, California February 28, 1997 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None ITEM 2. CHANGES IN SECURITIES None ITEM 3. DEFAULTS UPON 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) The following are filed as Exhibits to this Quarterly Report. The numbers refer to the Exhibit Table of Item 601 of Regulation S-K. (2) None (3) None (4) None (10) None (11)* Computation of earnings per share for the three months ended January 31, 1997 and 1996. (15)* Letter of Deloitte & Touche LLP regarding unaudited interim financial information. (18) None (19) None (22) None (23) None (24) None (27)* Financial Data Schedule for the three months ended January 31, 1997. * Items not previously filed are designated by an asterisk. (b) Reports on Form 8-K filed for the three months ended January 31, 1997. None 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 and in the capacity indicated. OPTICAL COATING LABORATORY, INC. (Registrant) March 17, 1997 /s/ JOSEPH C. ZILS Date Joseph C. Zils Vice President, General Counsel and Acting Chief Financial Officer (Principal Financial Officer) EX-11 2 OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES EXHIBIT 11. COMPUTATION OF EARNINGS PER SHARE For the three months ended January 31, 1997 and 1996 (Amounts in thousands, except per share data) 1997 1996 PRIMARY SHARES: Average common shares outstanding 9,777 9,514 Common equivalent shares outstanding 388 605 10,165 10,119 Net income $907 $ 740 Less dividend on preferred stock (240) (240) Net income applicable to common stock $667 $ 500 Net income per common and common equivalent share, primary $ .07 $ .05 FULLY DILUTED SHARES: Average common shares outstanding 9,777 9,514 Common equivalent shares outstanding 388 605 Potential dilution of preferred stock 1,143 1,143 11,308 11,262 Net income applicable to common stock $ 667 $ 500 Add back dividend on preferred stock 240 240 Net income for calculating fully diluted earnings per share $907 $ 740 Net income per common and common equivalent share, fully diluted $ .08 $ .07 NOTE: Fully diluted earnings per share do not result in dilution of three percent or more or are anti-dilutive and, therefore, are not separately presented in the consolidated statements of income. EX-15 3 EXHIBIT 15. LETTER RE UNAUDITED INTERIM FINANCIAL INFORMATION To the Board of Directors and Stockholders of Optical Coating Laboratory, Inc. Santa Rosa, California We have reviewed, in accordance with standards established by the American Institute of Certified Public Accountants, the unaudited interim financial information of Optical Coating Laboratory, Inc. and subsidiaries for the periods ended January 31, 1997 and 1996 as indicated in our report (which report makes reference to the report of other accountants), dated February 28, 1997. Because we did not perform an audit, we expressed no opinion on that information. We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended January 31, 1997, is incorporated by reference in Registration Statements No. 33-41050, No. 33-26271, No. 33-12276, No. 33-48808, No. 33-65132, and No. 33-60891 on Forms S-8, Registration Statement No. 33-61177 and No. 33-65319 on Form S-3. We are also aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act, is not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act. Deloitte & Touche LLP San Jose, California March 13, 1997 EX-27 4
5 3-MOS OCT-31-1996 JAN-31-1997 10,056 0 31,090 1,779 18,995 69,321 170,397 83,556 168,980 30,119 0 67,722 0 11,309 20,139 168,980 45,720 45,720 30,199 30,199 13,071 0 1,052 1,573 630 907 0 0 0 907 .07 .07
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