| 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 85% domestic military customers and 15% foreign military customers. For the six months ending March 28, 2021, the Optex
segment revenue is derived from the U.S. government, 25%, and two major U.S. defense contractors representing 24% and 13%, 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 28, 2021, the Richardson facility operated with 53 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 22% and military sales to prime and subcontracted customers represent 78% of the
external segment revenue. Approximately 76% of the AOC revenue is derived from external customers and approximately 24% is related to
intersegment sales to Optex Systems in support of military contracts. For the six months ended March 28, 2021, the AOC segment
revenue from two major defense contractors represents approximately 9%, and 7% of the Company’s consolidated revenue, respectively,
and revenue from one commercial customer represents 5% of the Company’s consolidated revenue.
The Applied Optics Center is located in Dallas, Texas
with leased premises consisting of approximately 44,867 square feet of space. As of March 28, 2021, AOC operated with 32 full time equivalent
employees in a single shift operation.
The financial tables below present the information
for each of the reportable segment’s 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 28, 2021 |
|
| |
|
Optex Systems
Richardson
|
|
|
Applied Optics Center
Dallas
|
|
|
Other
(non-allocated costs and intersegment eliminations)
|
|
|
Consolidated
Total
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Revenues from external customers |
|
$ |
2,805 |
|
|
$ |
1,441 |
|
|
$ |
- |
|
|
$ |
4,246 |
|
| Intersegment revenues |
|
|
- |
|
|
|
530 |
|
|
|
(530 |
) |
|
|
- |
|
| Total Revenue |
|
$ |
2,805 |
|
|
$ |
1,971 |
|
|
$ |
(530 |
) |
|
$ |
4,246 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest expense |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
2 |
|
|
$ |
2 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation and Amortization |
|
$ |
10 |
|
|
$ |
55 |
|
|
$ |
- |
|
|
$ |
65 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss before taxes |
|
$ |
(189 |
) |
|
$ |
(168 |
) |
|
$ |
(228 |
) |
|
$ |
(585 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other significant noncash items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Allocated home office expense |
|
$ |
(153 |
) |
|
$ |
153 |
|
|
$ |
- |
|
|
$ |
- |
|
| Loss on change in fair value of warrants |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
169 |
|
|
$ |
169 |
|
| Stock compensation expense |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
57 |
|
|
$ |
57 |
|
| Warranty Expense |
|
$ |
- |
|
|
$ |
39 |
|
|
$ |
- |
|
|
$ |
39 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Segment Assets |
|
$ |
14,820 |
|
|
$ |
6,307 |
|
|
$ |
- |
|
|
$ |
21,127 |
|
| Expenditures for segment assets |
|
$ |
- |
|
|
$ |
47 |
|
|
$ |
- |
|
|
$ |
47 |
|
| |
|
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 option 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) |
|
| |
|
Six months ended March 28, 2021 |
|
| |
|
Optex Systems
Richardson |
|
|
Applied Optics Center
Dallas |
|
|
Other
(non-allocated costs and intersegment eliminations) |
|
|
Consolidated
Total |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Revenues from external customers |
|
$ |
5,833 |
|
|
$ |
2,884 |
|
|
$ |
- |
|
|
$ |
8,717 |
|
| Intersegment revenues |
|
|
- |
|
|
|
896 |
|
|
|
(896 |
) |
|
|
- |
|
| Total Revenue |
|
$ |
5,833 |
|
|
$ |
3,780 |
|
|
$ |
(896 |
) |
|
$ |
8,717 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest expense |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
5 |
|
|
$ |
5 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation and Amortization |
|
$ |
21 |
|
|
$ |
107 |
|
|
$ |
- |
|
|
$ |
128 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (loss) before taxes |
|
$ |
24 |
|
|
$ |
(245 |
) |
|
$ |
739 |
|
|
$ |
518 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other significant noncash items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Allocated home office expense |
|
$ |
(353 |
) |
|
$ |
353 |
|
|
$ |
- |
|
|
$ |
- |
|
| Gain on change in fair value of warrants |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
(858 |
) |
|
$ |
(858 |
) |
| Stock compensation expense |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
114 |
|
|
$ |
114 |
|
| Warranty expense |
|
$ |
- |
|
|
$ |
48 |
|
|
$ |
- |
|
|
$ |
48 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Segment Assets |
|
$ |
14,820 |
|
|
$ |
6,307 |
|
|
$ |
- |
|
|
$ |
21,127 |
|
| Expenditures for segment assets |
|
$ |
20 |
|
|
$ |
108 |
|
|
$ |
- |
|
|
$ |
128 |
|
| |
|
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 option compensation expense |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
57 |
|
|
$ |
57 |
|
| Warranty Expense |
|
$ |
- |
|
|
$ |
59 |
|
|
$ |
- |
|
|
$ |
59 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Segment Assets |
|
$ |
12,793 |
|
|
$ |
6,784 |
|
|
$ |
- |
|
|
$ |
19,577 |
|
| Expenditures for segment assets |
|
$ |
46 |
|
|
$ |
50 |
|
|
$ |
- |
|
|
$ |
96 |
|
|