Quarterly report pursuant to Section 13 or 15(d)

Segment Reporting

v3.20.2
Segment Reporting
 9 Months Ended
Jun. 28, 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

 

The Optex Systems segment revenue is comprised of approximately 92% domestic military customers and 8% foreign military customers. For the nine months ending June 28, 2020, the Optex segment revenue is derived from the U.S. government, 42%, and two major U.S. defense contractors representing 15% 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 June 28, 2020, the Richardson facility operated with 72 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 85% of the AOC revenue is derived from external customers and approximately 15% is related to intersegment sales to Optex Systems in support of military contracts. For the nine months ended June 28, 2020, the AOC segment revenue from the U.S. government, one major commercial customer, and one major defense contractor represents approximately 11%, 9% and 6% 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 June 28, 2020, AOC operated with 37 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 June 28, 2020  
    Optex Systems
Richardson		     Applied Optics
Center
Dallas		     Other
(non-allocated costs
and intersegment
eliminations)		     Consolidated
Total		  
                         
Revenues from external customers   $ 3,851     $ 1,998     $ -     $ 5,849  
Intersegment revenues     -       421       (421 )     -  
Total Revenue   $ 3,851     $ 2,419     $ (421 )   $ 5,849  
                                 
Interest expense   $ -     $ -     $ 5     $ 5  
                                 
Depreciation and Amortization   $ 10     $ 51     $ -     $ 61  
                                 
Income before taxes   $ 97     $ 592     $ (653 )   $ 36  
                                 
Other significant noncash items:                                
Allocated home office expense   $ (170 )   $ 170     $ -     $ -  
Loss on change in fair value of warrants   $ -     $ -     $ 585     $ 585  
Stock compensation expense   $ -     $ -     $ 63     $ 63  
Warranty Expense   $ -     $ 22     $ -     $ 22  
                                 
Segment Assets   $ 13,602     $ 6,522     $ -     $ 20,124  
Expenditures for segment assets   $ 54     $ -     $ -     $ 54  

 

    Reportable Segment Financial Information
(thousands)		  
    Three months ended June 30, 2019  
    Optex Systems
Richardson		     Applied Optics
Center
Dallas		     Other
(non-allocated costs
and intersegment
eliminations)		     Consolidated
Total		  
                         
Revenues from external customers   $ 3,571     $ 1,776     $ -     $ 5,347  
Intersegment revenues     -       622       (622 )     -  
Total Revenue   $ 3,571     $ 2,398     $ (622 )   $ 5,347  
                                 
Interest expense   $ -     $ -     $ 5     $ 5  
                                 
Depreciation and Amortization   $ 7     $ 79     $ -     $ 86  
                                 
Income before taxes   $ 95     $ 196     $ 50     $ 341  
                                 
Other significant noncash items:                                
Allocated home office expense   $ (171 )   $ 171     $ -     $ -  
Gain on Change in Fair Value of Warrants   $ -     $ -     $ (81 )   $ (81 )
Stock option compensation expense   $ -     $ -     $ 26     $ 26  
Royalty expense amortization   $ 8     $ -     $ -     $ 8  
Warranty Expense   $ -     $ 12     $ -     $ 12  
                                 
Segment Assets   $ 9,606     $ 4,545     $ -     $ 14,151  
Expenditures for segment assets   $ 39     $ 1     $ -     $ 40  

 

    Reportable Segment Financial Information
(thousands)		  
    Nine months ended June 28, 2020  
    Optex Systems
Richardson		     Applied Optics
Center
Dallas		     Other
(non-allocated costs
and intersegment
eliminations)		     Consolidated
Total		  
                         
Revenues from external customers   $ 11,917     $ 6,765     $ -     $ 18,682  
Intersegment revenues     -       1,202       (1,202 )     -  
Total Revenue   $ 11,917     $ 7,967     $ (1,202 )   $ 18,682  
                                 
Interest expense   $ -     $ -     $ 17     $ 17  
                                 
Depreciation and Amortization   $ 24     $ 161     $ -     $ 185  
                                 
Income before taxes   $ 1,148     $ 1,098     $ (641 )   $ 1,605  
                                 
Other significant noncash items:                                
Allocated home office expense   $ (510 )   $ 510     $ -     $ -  
Loss on change in fair value of warrants   $ -     $ -     $ 504     $ 504  
Stock compensation expense   $ -     $ -     $ 120     $ 120  
Warranty expense   $ -     $ 81     $ -     $ 81  
                                 
Segment Assets   $ 13,602     $ 6,522     $ -     $ 20,124  
Expenditures for segment assets   $ 100     $ 50     $ -     $ 150  

 

    Reportable Segment Financial Information
(thousands)		  
    Nine months ended June 30, 2019  
    Optex
Systems
Richardson		     Applied Optics
Center
Dallas		     Other
(non-allocated costs
and intersegment
eliminations)		     Consolidated
Total		  
                         
Revenues from external customers   $ 12,047     $ 6,278     $ -     $ 18,325  
Intersegment revenues     -       1,432       (1,432 )     -  
Total Revenue   $ 12,047     $ 7,710     $ (1,432 )   $ 18,325  
                                 
Interest expense   $ -     $ -     $ 17     $ 17  
                                 
Depreciation and Amortization   $ 23     $ 232     $ -     $ 255  
                                 
Income before taxes   $ 1,326     $ 904     $ (566 )   $ 1,664  
                                 
Other significant noncash items:                                
Allocated home office expense   $ (512 )   $ 512     $ -     $ -  
Loss on change in fair value of warrants   $ -     $ -     $ 465     $ 465  
Stock option compensation expense   $ -     $ -     $ 84     $ 84  
Royalty expense amortization   $ 23     $ -     $ -     $ 23  
Warranty Expense   $ -     $ 29     $ -     $ 29  
                                 
Segment Assets   $ 9,606     $ 4,545     $ -     $ 14,151  
Expenditures for segment assets   $ 43     $ 93     $ -     $ 136