| Segment Reporting |
Note 3 - Segment Reporting
The Company’s
reportable segments are strategic businesses offering similar products to similar markets and customers; however, the companies
are operated and managed separately due to differences in manufacturing technology, equipment, geographic location, and specific
product mix. Applied Optics Center was acquired as a unit, and the management at the time of the acquisition was retained. Both
the Applied Optics Center and Optex Systems – Richardson operate as reportable segments under the Optex Systems, Inc. corporate
umbrella.
The Applied Optics
Center segment also serves as the key supplier of laser coated filters used in the production of periscope assemblies for the Optex
Systems-Richardson (“Optex Systems”) segment. Intersegment sales and transfers are accounted for at annually agreed
to pricing rates based on estimated segment product cost, which includes segment direct manufacturing and general and administrative
costs, but exclude profits that would apply to third party external customers.
Optex Systems
(OPX) – Richardson, Texas
Optex Systems revenues are primarily in support
of prime and subcontracted military customers. During the six months ended March 29, 2020, approximately 94% of the Optex Systems
segment revenue is comprised of domestic military customers and 6% is comprised of foreign military customers. Optex Systems segment
revenue is derived from the U.S. government, 43%, and two major U.S. defense contractors representing 12% and 6%, of the Company’s
consolidated revenue, respectively.
Optex Systems is located in Richardson Texas,
with leased premises consisting of approximately 49,100 square feet. As of March 29, 2020, the Richardson facility operated with
74 full time equivalent employees in a single shift operation. Optex Systems, Richardson serves as the home office for both the
Optex Systems and Applied Optics Center segments.
Applied Optics Center (AOC) –
Dallas, Texas
The Applied Optics Center serves primarily
domestic U.S. customers. Sales to commercial customers represent 28% and military sales to prime and subcontracted customers represent
72% of the external segment revenue. Approximately 86% of the AOC revenue is derived from external customers and approximately
14% is related to intersegment sales to Optex Systems in support of military contracts. For the six months ended March 29, 2020,
the AOC segment revenue from the U.S. government, one major commercial customer, and one major defense contractor represents approximately
11%, 9% and 7% of the Company’s consolidated revenue, respectively.
The Applied Optics Center is located in Dallas,
Texas with leased premises consisting of approximately 44,867 square feet of space. As of March 29, 2020, AOC operated with 35
full time equivalent employees in a single shift operation.
The financial tables below present the information
for each of the reportable segments profit or loss as well as segment assets for each year. The Company does not allocate interest
expense, income taxes or unusual items to segments.
| |
|
Reportable Segment Financial Information
(thousands) |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Three months ended March 29, 2020 |
|
| |
|
Optex Systems
Richardson |
|
|
Applied Optics Center
Dallas |
|
|
Other
(non-allocated costs and intersegment eliminations) |
|
|
Consolidated
Total |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Revenues from external customers |
|
$ |
4,422 |
|
|
$ |
2,525 |
|
|
$ |
- |
|
|
$ |
6,947 |
|
| Intersegment revenues |
|
|
- |
|
|
|
407 |
|
|
|
(407 |
) |
|
|
- |
|
| Total Revenue |
|
$ |
4,422 |
|
|
$ |
2,932 |
|
|
$ |
(407 |
) |
|
$ |
6,947 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest expense |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
6 |
|
|
$ |
6 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation and Amortization |
|
$ |
8 |
|
|
$ |
51 |
|
|
$ |
- |
|
|
$ |
59 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income before taxes |
|
$ |
568 |
|
|
$ |
244 |
|
|
$ |
1,295 |
|
|
$ |
2,107 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other significant noncash items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Allocated home office expense |
|
$ |
(170 |
) |
|
$ |
170 |
|
|
$ |
- |
|
|
$ |
- |
|
| Gain on change in fair value of warrants |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
(1,332 |
) |
|
$ |
(1,332 |
) |
| Stock compensation expense |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
31 |
|
|
$ |
31 |
|
| Warranty Expense |
|
$ |
- |
|
|
$ |
30 |
|
|
$ |
- |
|
|
$ |
30 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Segment Assets |
|
$ |
12,793 |
|
|
$ |
6,784 |
|
|
$ |
- |
|
|
$ |
19,577 |
|
| Expenditures for segment assets |
|
$ |
33 |
|
|
$ |
34 |
|
|
$ |
- |
|
|
$ |
67 |
|
| |
|
Reportable Segment Financial Information
(thousands) |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Three months ended March 31, 2019 |
|
| |
|
Optex Systems
Richardson |
|
|
Applied Optics Center
Dallas |
|
|
Other
(non-allocated costs and intersegment eliminations) |
|
|
Consolidated
Total |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Revenues from external customers |
|
$ |
4,648 |
|
|
$ |
2,440 |
|
|
$ |
- |
|
|
$ |
7,088 |
|
| Intersegment revenues |
|
|
- |
|
|
|
395 |
|
|
|
(395 |
) |
|
|
- |
|
| Total Revenue |
|
$ |
4,648 |
|
|
$ |
2,835 |
|
|
$ |
(395 |
) |
|
$ |
7,088 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest expense |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
6 |
|
|
$ |
6 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation and Amortization |
|
$ |
7 |
|
|
$ |
77 |
|
|
$ |
- |
|
|
$ |
84 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (loss) before taxes |
|
$ |
826 |
|
|
$ |
378 |
|
|
$ |
(1,960 |
) |
|
$ |
(756 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other significant noncash items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Allocated home office expense |
|
$ |
(171 |
) |
|
$ |
171 |
|
|
$ |
- |
|
|
$ |
- |
|
| Loss on Change in Fair Value of Warrants |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
1,932 |
|
|
$ |
1,932 |
|
| Stock option compensation expense |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
22 |
|
|
$ |
22 |
|
| Royalty expense amortization |
|
$ |
8 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
8 |
|
| Warranty Expense |
|
$ |
- |
|
|
$ |
38 |
|
|
$ |
- |
|
|
$ |
38 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Segment Assets |
|
$ |
10,024 |
|
|
$ |
4,736 |
|
|
$ |
- |
|
|
$ |
14,760 |
|
| Expenditures for segment assets |
|
$ |
- |
|
|
$ |
78 |
|
|
$ |
- |
|
|
$ |
78 |
|
| |
|
Reportable Segment Financial Information
(thousands) |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Six months ended March 29, 2020 |
|
| |
|
Optex Systems
Richardson |
|
|
Applied Optics Center
Dallas |
|
|
Other
(non-allocated costs and intersegment eliminations) |
|
|
Consolidated
Total |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Revenues from external customers |
|
$ |
8,066 |
|
|
$ |
4,767 |
|
|
$ |
- |
|
|
$ |
12,833 |
|
| Intersegment revenues |
|
|
- |
|
|
|
780 |
|
|
|
(780 |
) |
|
|
- |
|
| Total Revenue |
|
$ |
8,066 |
|
|
$ |
5,547 |
|
|
$ |
(780 |
) |
|
$ |
12,833 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest expense |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
11 |
|
|
$ |
11 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation and Amortization |
|
$ |
15 |
|
|
$ |
110 |
|
|
$ |
- |
|
|
$ |
125 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income before taxes |
|
$ |
1,050 |
|
|
$ |
506 |
|
|
$ |
13 |
|
|
$ |
1,569 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other significant noncash items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Allocated home office expense |
|
$ |
(340 |
) |
|
$ |
340 |
|
|
$ |
- |
|
|
$ |
- |
|
| Gain on change in fair value of warrants |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
(81 |
) |
|
$ |
(81 |
) |
| Stock compensation expense |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
57 |
|
|
$ |
57 |
|
| Warranty expense |
|
$ |
- |
|
|
$ |
59 |
|
|
$ |
- |
|
|
$ |
59 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Segment Assets |
|
$ |
12,793 |
|
|
$ |
6,784 |
|
|
$ |
- |
|
|
$ |
19,577 |
|
| Expenditures for segment assets |
|
$ |
46 |
|
|
$ |
50 |
|
|
$ |
- |
|
|
$ |
96 |
|
| |
|
Reportable Segment Financial Information
(thousands) |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Six months ended March 31, 2019 |
|
| |
|
Optex Systems
Richardson |
|
|
Applied Optics Center
Dallas |
|
|
Other
(non-allocated costs and intersegment eliminations) |
|
|
Consolidated
Total |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Revenues from external customers |
|
$ |
8,477 |
|
|
$ |
4,502 |
|
|
$ |
- |
|
|
$ |
12,979 |
|
| Intersegment revenues |
|
|
- |
|
|
|
810 |
|
|
|
(810 |
) |
|
|
- |
|
| Total Revenue |
|
$ |
8,477 |
|
|
$ |
5,312 |
|
|
$ |
(810 |
) |
|
$ |
12,979 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest expense |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
12 |
|
|
$ |
12 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation and Amortization |
|
$ |
16 |
|
|
$ |
153 |
|
|
$ |
- |
|
|
$ |
169 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (loss) before taxes |
|
$ |
1,231 |
|
|
$ |
708 |
|
|
$ |
(617 |
) |
|
$ |
1,322 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other significant noncash items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Allocated home office expense |
|
$ |
(341 |
) |
|
$ |
341 |
|
|
$ |
- |
|
|
$ |
- |
|
| Loss on change in fair value of warrants |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
547 |
|
|
$ |
547 |
|
| Stock option compensation expense |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
58 |
|
|
$ |
58 |
|
| Royalty expense amortization |
|
$ |
15 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
15 |
|
| Warranty Expense |
|
$ |
- |
|
|
$ |
17 |
|
|
$ |
- |
|
|
$ |
17 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Segment Assets |
|
$ |
10,024 |
|
|
$ |
4,736 |
|
|
$ |
- |
|
|
$ |
14,760 |
|
| Expenditures for segment assets |
|
$ |
4 |
|
|
$ |
92 |
|
|
$ |
- |
|
|
$ |
96 |
|
|