Quarterly report pursuant to Section 13 or 15(d)

Segment Reporting

v3.20.1
Segment Reporting
6 Months Ended
Mar. 29, 2020
Segment Reporting [Abstract]  
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