Annual report pursuant to Section 13 and 15(d)

Segment Reporting

v3.20.4
Segment Reporting
 12 Months Ended
Sep. 27, 2020
Segment Reporting [Abstract]  
Segment Reporting

Note 4 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. Approximately 88% of the Optex Systems segment revenue is comprised of domestic military customers, and 12% is comprised of foreign military customers. Optex Systems segment revenue is derived from the U.S. government, 40%, and two major U.S. defense contractors representing 19% 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 September 27, 2020, the Richardson facility operated with 65 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 32% and military sales to prime and subcontracted customers represent 68% of the total segment revenue. Approximately 84% of the AOC revenue is derived from external customers and approximately 16% is related to intersegment sales to Optex Systems in support of military contracts. For the twelve months ended September 27, 2020, the AOC segment revenue from the U.S. government, one major commercial customer, and two major defense contractors represent approximately 10%, 9% and 5% 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 September 27, 2020, AOC operated with 37 full time equivalent employees in a single shift operation.

  

The financial table below presents 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)		  
    Twelve months ended September 27, 2020  
    Optex Systems
Richardson		    

Applied Optics Center

Dallas

    

Other

(non-allocated costs

and intersegment eliminations)

     Consolidated
Total		  
                         
Revenues from external customers   $ 17,233     $ 8,657     $ -     $ 25,890  
Intersegment revenues     -       1,689       (1,689 )     -  
Total Revenue   $ 17,233     $ 10,346     $ (1,689 )   $ 25,890  
                                 
Interest expense   $ -     $ -     $ 19     $ 19  
                                 
Depreciation and Amortization   $ 36     $ 212     $ -     $ 248  
                                 
Income before taxes   $ 1,950     $ 1,130     $ (724 )   $ 2,356  
                                 
Other significant noncash items:                                
Allocated home office expense   $ (673 )   $ 673     $ -     $ -  
Loss on change in fair value of warrants   $ -     $ -     $ 508     $ 508  
Stock compensation expense   $ -     $ -     $ 197     $ 197  
Warranty expense   $ -     $ 76     $ -     $ 76  
                                 
Segment Assets   $ 14,642     $ 5,703     $ -     $ 20,345  
Expenditures for segment assets   $ 102     $ 50     $ -     $ 152  

 

     Reportable Segment Financial Information
(thousands) 		 
     Twelve months ended September 29, 2019  
    Optex Systems
Richardson		     Applied Optics Center
Dallas		    

Other
(non-allocated costs

and intersegment eliminations)

     Consolidated
Total		  
                         
Revenues from external customers   $ 16,219     $ 8,311     $ -     $ 24,530  
Intersegment revenues     -       1,712       (1,712 )     -  
Total Revenue   $ 16,219     $ 10,023     $ (1,712 )   $ 24,530  
                                 
Interest expense   $ -     $ -     $ 23     $ 23  
                                 
Depreciation and Amortization   $ 29     $ 311     $ -     $ 340  
                                 
Income before taxes   $ 2,019     $ 1,291     $ 1,208     $ 4,518  
                                 
Other significant noncash items:                                
Allocated home office expense   $ (684 )   $ 684     $ -     $ -  
Gain on change in fair value of warrants   $ -     $ -     $ (1,344 )   $ (1,344 )
Stock option compensation expense   $ -     $ -     $ 113     $ 113  
Royalty expense amortization   $ 30     $ -     $ -     $ 30  
Warranty Expense   $ -     $ 60     $ -     $ 60  
                                 
Segment Assets   $ 11,570     $ 5,986     $ -     $ 17,556  
Expenditures for segment assets   $ 47     $ 96     $ -     $ 143