Annual report pursuant to Section 13 and 15(d)

Segment Reporting

v3.22.0.1
Segment Reporting
 12 Months Ended
Oct. 03, 2021
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 85% of the Optex Systems segment revenue is comprised of domestic military customers, and 15% is comprised of foreign military customers. Optex Systems segment revenue is derived from the U.S. government, 28%, and two major U.S. defense contractors representing 21% and 11%, 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 October 3, 2021, the Richardson facility operated with 47 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 35% and military sales to prime and subcontracted customers represent 65% of the total 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 twelve months ended October 3, 2021, the AOC segment revenue from the U.S. government, one major commercial customer, and two major defense contractors represent approximately 10%, 7% 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 October 3, 2021, 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 October 3, 2021  
    Optex Systems
Richardson		     Applied Optics Center
Dallas		     Other
(non-allocated costs and intersegment eliminations)		     Consolidated
Total		  
                         
Revenues from external customers   $ 11,827     $ 6,395     $ -     $ 18,222  
Intersegment revenues     -       1,056       (1,056 )     -  
Total Revenue   $ 11,827     $ 7,451     $ (1,056 )   $ 18,222  
                                 
Interest expense   $ -     $ -     $ 11     $ 11  
                                 
Depreciation and Amortization   $ 41     $ 222     $ -     $ 263  
                                 
Income (loss) before taxes   $ 251     $ (517 )   $ 2,296     $ 2,030  
                                 
Other significant noncash items:                                
Allocated home office expense   $ (677 )   $ 677     $ -     $ -  
Gain on change in fair value of warrants   $ -     $ -     $ (2,535 )   $ (2,535 )
Stock compensation expense   $ -     $ -     $ 228     $ 228  
Warranty expense   $ (15 )   $ 90     $ -     $ 75  
                                 
Segment Assets   $ 14,010     $ 6,845     $ -     $ 20,855  
Expenditures for segment assets   $ 20     $ 254     $ -     $ 274  

 

    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 option compensation expense   $ -     $ -     $ 197     $ 197  
Warranty Expense   $ -     $ 76     $ -     $ 76  
                                 
Segment Assets   $ 14,642     $ 5,703     $ -     $ 20,345  
Expenditures for segment assets   $ 102     $ 50     $ -     $ 152